I'm going to try to summarize the discussion thus far.

NTLM auth is horribly broken, however:
  1) It's currently the only auth scheme you can get SSO with
  2) It does not send the password in the clear over the wire

Therefore, if you are already running a Windows domain on your 
network, you might as well use NTLM auth with Squid.

However, NTLM is still horribly broken. Therefore, a properly 
functioning auth scheme needs to be implemented by OS, directory 
service, and browser vendors to replace NTLM.

The best candidates for this are:
  1) Kerberos
  2) md5-sess

Kerberos has the added benefit of already being part of both
Unix and Windows (2000 and above) - all that is missing is
browser support.

If OS and browser vendors adopted such a solution, it would readily
be added to Squid.

Henrik and Robert, thank you for a very enlightening discussion, and
I hope my summary here effectively hit the main points. However, I 
(usually) know enough to know when I'm out of my depth, so I'm going 
to exit this thread now, and leave further discussion to the experts.

Adam
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