Yes, this is what is called "WPA Migration mode". In the Encryption configuration select TKIP+WEP128 in order to support both.
Please be aware that security level is the smaller security configuration you do. Which means that your security level is "WEP" in this case. I mean if some one break the WEP key it will have access to your network.
My prefered design in this case is to have 2 VLANs. One with WEP, one with TKIP (WPA). The first VLAN can then be filtered by the LAN infrastructure (L2/L3 ACL, Firewall, ...), the second VLAN can have direct access to the intranet.
Hope this helps,
Vincent
