I've been trying to find a solution to this today without much luck.
I want to display a Member Registration Form next to the User Login Form. So if the user doesn't have an account they can just create one on the same page. I'm considering solving it this way - http://www.silverstripe.org/archive/show/3158?start=8#post178888
I was trying to extend the LoginForm class. I didn't think to add it to the Page_controller instead. IT should be easy then to just update the template with the two forms. That sounds like a hell of a lot easier way of doing it. I'll try it out on Monday.
Overriding Security.php's $allowed_actions array worked for the Registration form but then failed for all over actions performed by $LoginForm such as "Logging In" and "Logging Out". It wasn't obvious where these are being set.
To solve this issue I eventually created a RegistrationPage class with the form and included a non-custom $LoginForm into the template.
I then set a default login destination in the config like this.
I then fixed up the Securitty.ss template to show a message when logged in / logged out as the default logout action is still to redirect to this template.