I believe that it's possible, but you'll need to create a .vhd with your iso file.
Useful links
http://www.windowsazure.com/en-us/manage/linux/common-tasks/upload-a-vhd/
http://www.windowsazure.com/en-us/manage/windows/common-tasks/upload-a-vhd/
PS: Let me know if it works.