My team builds reusable libraries for other (internal) software development teams. We use FlexBuilder 3 as our development environment. Our SCM standards state that these projects must include test harnesses and a unit test runner, and (of course) we want to be able to use the debugger. For that reason, all the projects are Applications.
Our build scripts (used primarily by the CI system and for release deployment) build our actual libraries which works great. This approach is used so that FlexBuilder is not required to actually build our production artifacts (on the command line).
The problem is this – in order to have add a FlexBuilder Project to the Library Path for an Application it must be a Library Project. I have tried adding a nature to the project that we want included, but haven't gotten it to work yet. You would want to do that if you wanted to debug source files in another project.
A simple (yet annoying) work around is to include the source folder of the "library project" as a source folder in the "application project." It's annoying because it takes multiple steps to swap between a swc of the "library project" and the source folder of the project itself.
Best Answer
I would also suggest breaking this up into 2 projects. Have 1 library project and 1 application for the tests and the testrunner.
On a sidenote: FlexBuilder 4 will have support for running FlexUnit tests in the IDE, for both Flex applications and Flex library projects. So you won't have to maintain an application just for the sake of running the tests.