As a result I am limited to bitmap and cannot use truetype fonts, correct?
No!
I've created for my project an own truetype font. For that you could use the font creator from high-logic.
I know Harry Potter's nice Font-Generator but am I allowed to modify existing standard Windows fonts?
I dont't think that you are allowed to modyfing or using fonts without asking the author.
But I think you can use true type fonts which were created by others for non-commercial "home" projects.
