I don't have experience with this, but from what I've read, you can lager in a bottle. IIRC, fermenting/lagering under CO2 pressure is fairly common commercially. I don't think the priming sugar would invalidate this, though I don't know for certain.
It's preferred to do bulk lagering for a few reasons. A few I can think of (using logic, not experience here, so they may be wrong)... You'll get more uniform results from bulk lagering; even with all your bottles in the same place, the temperatures can vary more than you'd think from bottle-to-bottle. If you bulk lager and then bottle, you'll leave behind any trub that drops out during lagering. Finally, you may be somewhat more exposed to oxygen in bottles since the surface area exposed to the headspace is far greater (something like 50 square inches, versus maybe 10-12 square inches in a carboy, although this one is complicated because you may have some purging of that headspace due to CO2 production, so that may protect you from some of the effects).
