I'm doing almost the same thing here, so I think I understand your prediciment.

1.  Creating the accounts manually is tedious at best.  Students come and go constantly, you are looking at getting a spreadsheet once a week or so instead of twice a year to keep up.

2.  Connecting to their AD from the Internet through their firewall is a much bigger security risk than putting a webserver on the Intranet and publishing it instead. 

3.  Probably your best best, a secure link to a local domain controller.  Putting DNN on a DC is probably not a great idea security-wise, and you will need to make the server a member of the domain to allow seamless authentication.

Here we have the webserver as a part of the domain on the Intranet, published through an ISA server.  That is about as secure as you're going to get and still have seemless AD integration.  Once you move the server to an outside network, the difficulty level increases dramatically, and security gets much more complex.

Thanks everybody.

The french DNN professionals group  has a meeting with Microsoft in Paris tomorrow, and these topics will be discussed. Sure I will ask if members had experiences with this IIFP in a DotNetNuke context. As for my school I did not get this contract yet, so I did not have to decide on a solution, but I keep tuned.

One of the member of our group who will attend tomorrow told me that he used web services to authenticate a DNN 4.3.5 intranet to an AD. I'll also try to get more info about that.