I found these two articles very informative, In many of my project the user log in through a form and are validated against AD. From there i would create a NetworkCredential that i would pass to the sql reporting webservice. This is another method you can use to provide sql reports with out having to hit add.

Using Forms Authentication in Reporting Services:
http://msdn2.microsoft.com/en-us/library/aa902691(sql.80).aspx

Using SQL Reporting Services 2005 and Forms Authentication with the Whidbey/2.0 SQLMembershipProvider
http://blogs.msdn.com/bimusings/archive/2005/12/05/500195.aspx