In the interest of security, is it considered a best practice to always use a VPN connection and then launch Terminal Services, or is the built-in security of Terminal Services enough protection over the Internet?
Definitely: if you're concerned about security, a VPN is always better than no VPN.
Another option is using SSL. As you probably know if you're using MetaFrame, Citrix Secure Gateway supports SSL....
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You can also get SSL support for RDP in Tarantella (formerly NewMoon) and Microsoft will be offering SSL support for RDP in R2, an upcoming interim release of Windows Server 2003.