Short answer, yes, you can set your virtual directory to use Windows Auth. Be sure to add a user with the same loginID as the credentials you're going to connect with and give it admin or superadmin rights, or you won't be able to get in. You have to add your users or do a mass import of your AD if you don't want to add them one at a time. Then you have to manually assign roles to them. If you have a small set of moderators, it might work. We are trying this out now.

I am wanting to do the same thing but need to be able to also integrate with AD Group permissions. Did you try doing that as well? If so could you share how you accomplished it.