How to remote a single application, rather than the entire desktop

Sounds like you need Terminal Services Remote Apps, which is in Server 2008. As the technet blurb says:

With Terminal Services, organizations can provide access to Windows®-based programs from almost any location to almost any computing device. Terminal Services in Windows Server® 2008 includes Terminal Services RemoteApp (TS RemoteApp). You can use several different methods to deploy RemoteApp programs, such as Terminal Services Web Access (TS Web Access). With TS Web Access, you can provide access to RemoteApp programs through a Web page over the Internet or over an intranet. TS Web Access is also included in Windows Server 2008

Im not sure if a web interface is good enough for what you need, or if your looking for something more integrated. See here for details on TS Remote Apps and here for details on how to do it.

Citrix does this (seamless window) if you want to pay for it, or as already answered - this is possible as part of the Server 2008 and onwards without Citrix.

You can even package this as an msi and do a very simple policy deploy of it to user's start menus ^^

There are also a few hacks out there to do this with the old Terminal Services and some viewport cropping... I haven't tried them though.