Yes it is possible.
My understanding is that if you can just upload a sketch using Particle Build IDE (or Arduino IDE for that matter), and select v1.0.6 it will update only the runtime copy of the firmware that runs with that sketch. The base firmware will remain at v1 (in your case), which only runs when in config mode.
There is due to be a method to update the base config-mode firmware, but I haven't yet seen those instructions be released (unless I missed them?), however that only applies when not running a sketch, so is less important.
Note: the Particle IDE has only just been released (and not officially yet!) so might have some issues (like possibly not all the libraries available yet). Therefore you might get a more reliable experience using Arduino IDE for now... although hopefully the official release of the Particle method is due any day now, and with it better instructions.