I'm considering a situation where a user account is created by a site administrator but that admin doesn't know what username or password that user wants. The first time the user actually visits the site they have to go through a registration process where they need to provide a username, password, etc.

The main advantage of this is the ability to create a user and associate it with roles that can only be assigned by the administrator while allowing the user flexibility in their username, password, etc.

Is there a way to do this in Orchard?

New users that register by themselves will be granted the Authenticated role.

You could assign permissions to the Authenticated role directly but this would not be a very maintainable solution as all users would get these permissions.

I don't know enough about Orchard to say if their is another way to achieve what you want.