DNN supports the provider model for membership and authentication.

What this means is that it is possible to build any sort of authentication solution you desire -  for example there are Windows Active Directory authentication, Facebook authentication, MSN Live authentication, Google and Twitter authentication systems just to name a few available for dnn already.
 
The provider you construct can communicate with your web service and handle the actual login / registration process internally with dnn.
Though understand that internally inside dnn you will still be creating dnn native users that link to your 3rd party authentication system.
The provider module can handle this automatically for you however some providers like our own facebook provider tend to add some user interaction to the rego process - basically we let the user choose a dnn user name themselves instead of carrying over the concept of a facebook username.

Westa