Why would you want to do this anyway? It lets you turn your torch holders into func_walls which helps to cut down on vis time, and reduces the number of cuts needed on the world geometry or it lets you use a mesh model only which would normally not cast any shadows.
So what does it involve? Spotlight abuse!
What we're actually doing is creating a spotlight that shines not just forwards, but a bit backwards too.
First, you would drop a light_torch_small_walltorch and place it somewhere, preferably against a wall.
Next, we set up the light emission settings just like we would a normal light. In this first image, I used my basic settings:
light: 450 delay: 5
Next, I set up my spotlight parameters:
angle: 270 _softangle: 250 mangle: 270 70 0
You will notice first that my spotlight angle setting is 270, meaning the spot is shining backwards, past it's origin. Indeed, setting angle to 360 would make it behave just like a normal light.
We use a _softangle setting slightly smaller so that the cone being cast doesn't have hard edges.
Finally, notice that our mangle setting is not straight up. Using a mangle setting of '0 90 0' (straight upwards) would work too, but the shadow on the ground will be circular and stretch out from the wall a bit too far (for my tastes, anyway), so what we do is we set the mangle so that the spotlight is upwards and slightly away from the wall that the light is attached to. This squashes the shadow on the ground into an oval shape.