To get the first pressing question out of the way: of course you can knit a flat panel on a round loom!
Instead of going all the way around, cast on the desired amount of pegs.
Wrap the yarn around the last peg twice, so that there are 2 full loops on the peg.
Then continue wrapping the yarn around each peg backwards and all movements reversed, until you reach the first peg again (the one next to the holding peg).
Knit over all pegs.
Wrap in the opposite direction again, make sure to wrap the first peg the opposite way as the rest of the pegs.
Repeat this same process again as many times as you like, until the flat panel has reached the desired length.