please clarify :
servlets are [generally] used to isolate and deploy code involved in the presentation of data in HTML (or similar markups) over HTTP.
How would your TelnetServlet fit this scenario ?
Are you not just describing a telnet server written in Java ?
You can convert your stand-alone socket server to be an MBean packaged in a .sar file. This way the server runs in the same JVM as JBoss as can all it's services. But you still have to handle things like thread pooling by yourself.