Ами общо взето си прав, писах малко на изуст. Може и да гръмне, а може и да мине, само с memory leak. Но в хелпа за TObject.Free си пише изрично:

Warning: Never explicitly free a component within one of its own event handlers or free a component from the event handler of a component it owns or contains. For example, don’t free a button in its OnClick event handler or free the form that owns the button from the button's OnClick event.

To free a form, call its Release method, which destroys the form and releases the memory allocated for it after all its event handlers and those of the components it contains are through executing.

Mixy