Yes! 🙂 There is now support for FBA and Windows Auth within Office 2007 and Office 2010 clients
You’ll find a much improved experience with SP2010 and Office 2010… Fewer prompts are just the beginning! Btw, I assume you’ve put your SharePoint sites in your users’ IE intranet security zones currently…? That helps as well.
One of the “little things that means a lot” with Office is that when you save documents to SharePoint as a user, you regain control of the application very quickly–Office has a background synchronization engine that takes care of efficiently streaming the doc up to the server while you keep working.
<i>This question was answered by Spencer Harbar, Enterprise Architect at Microsoft and Dan Holme, Consultant and Trainer, Intellium.</i>