I think embedding a form in this way is an abuse of TForm which was never designed to be so used.
It is far too over-engineered and resource-hungry to be a good choice, and there are many alternative containers that would suit your purpose better, among them TFrame, TPanel, TGroupBox, TScrollBox etc.
What is wrong with adding controls to the tabsheet directly, with no intervening form?
I agree with you, but we are limited to schedule and budget.
We should convert a 600+ unit old delphi 7 RAD DB SDI application to be TDI (tabbed similar to Firefox).
First, we changed TMenu to TTreeView and main form from SDI to TPageControl. I know it's still an SDI application, but the final user feels like it's a TDI application.
Then, manually, we are rewriting all units, forms and datamodules as similar and as fast as possible, changing as little code as we can.
It's a third party project with client's programmers being trained and co-working with us. Unfortunately, we are not free to make all decisions on development. The client's programmers will maintain the project afterwards.
If we could, we would rewrite everything from scratch using OOP, ORM and tests.
Now, we want to change from TPageControl to something visually more beautiful.