I want to host my sharepoint portal as a single sign on portal with web-form based authentication.
Yes. Perform a Google search using the terms "Single Sign On SharePoint Portal Server". Or if you search for Single Sign On in this discussion group in the old messages I'm sure you'll find a few...
Not without HEAVY modification and creating your own ISAPI authentication handler which will require a lot of work and testing and more likely break the Office 2003 integration. I will recommend waiting for Sharepoint 2007 v3 as this will be a supported scenario out of the box.