By it's very nature, the WebAuth feature will not allow any encryption. This is a feature very much like a hot-spot that you'd see in a coffee shop. In order to allow any user to access the authentication splash page, the WLAN has to be completely open.
If security is required, then it really has to come from higher layers of the stack (ie, IPSEC, HTTPS, SSH, etc).
So to answer your question, yes I have implemented a number of Web Auth WLANs, and no, it is absolutely not possible to implement any kind of encryption on the WLAN.
Hope this helps!
Richard.