Currently to make second level domain like domain.com work with azure is to use your dns provider name services to create root redirection of your domain to your cloudapp. It is not possible to manage the domain on my external namesrvers as it is not legal according to dns specification to create CNAME record for second level domain. On Windows 2008 it is not even possible to create such record when you have a MX record created for the same zone.

Please give another way of handling second level domains with azure.