Yes, it does, if TLS/SSL is configured for appropriate protocols - by default, only Exchange 2007 or newer is configured properly.
Exchange 2000 and 2003
Exchange 2000 and 2003 only support explicitly secured SMTP (port 25), implicitly secured POP3 (port 995) and implicitly secured IMAP (port 993).
Exchange 2007 also adds support for explicitly secured IMAP (port 143) and POP3 (port 110) as well. For more information about explicit and implicit TLS/SSL modes, check out the TLS/SSL tutorial. When configuring Exchange 2007, please be aware that Microsoft uses the term 'SSL' to refer to 'implicit TLS/SSL' and 'TLS' to refer to 'explicit TLS/SSL'.
For other authentication options for connecting to Exchange Server see How do I authenticate to Microsoft Exchange 2000 or 2003?