Basically, I agree with rpj. Code has to be in user-space, unless it's REALLY necessary.
But, to emphasize your question, which condition?
Some people claims that driver has to be in the kernel, which is not true. Some drivers are not timing sensitive, in fact lots of drivers are like that.
For example, the framer, RTC timer, i2c devices, etc. Those drivers can be easily moved to user space. There are even some file-systems that are written in user-space.
You should move to kernel space where the overhead, eg. user-kernel swap, becomes unacceptable for your code to work properly.
But there are lots of way to deal with this. For example, the /dev/mem provides a good way to access your physical memory, just like you do it from the kernel space.
When people talk about going to RTOS, I'm usually skeptical.
These days, the processor is so powerful, that most of the time, the real-time aspect becomes negligible.
But even, let's say, you're dealing with SONET, and you need to do a protection switching within 50ms (actually even less, since the 50ms constrains applies to the whole ring), you still can do the switching very fast, IF your hardware supports it.
Lots of framer these days can give you a hardware support that reduces the amount of writes that you need to do. Your job is basically responds to the interrupt as quickly as possible. And Linux is not bad at all. The interrupt latency I got was less 1ms, even if I have tons of other interrupts running (eg. IDE, ethernet, etc.).
And if that's still not enough, then maybe your hardware design is wrong. Some things are better left on the hardware. And when I said hardware, I mean ASIC, FPGA, Network Processor, or other advanced logic.