I believe what you're asking is can you have applications open in both EE-HCP stream AND foreign worker stream? I believe so, though I don't know anyone personally who has done this. Note that you would still be required to pay all associated application fees separately, so two sets of fees.
You do not need to withdraw, if you meet the requirements for CEC and want to apply that way after having submitted your paper PR app with nomination you absolutely can do that, it's the same as the above question where you'll need to pay two sets of application fees and you won't be refunded if they have started processing your application.
Note that EE applications received this time last year are only being finalized now.
Lets say your wife receives OINP nomination for foreign worker stream tomorrow, and submits a complete application via courier on Friday - she would most likely receive AoR in December/January.
As you said above, she may become eligible for CEC with 1 year work experience in March 2022, so she would need to put her profile in the pool and then wait for an invitation, let's say she has a competitive profile and receives an invitation in the next draw mid March 2022 and submits an application at the end of March 2022. It will still take a few months to receive AoR through EE process, by which point your previous PNP application would now have been processing for around 12 months and your new EE app has not started yet.
It would be worthwhile to submit a profile to the CEC/FSW pools in case of ITA anyway, but if eligibility for CEC is in March 2022 it may be better to hope for OINP foreign worker stream in the meantime.