Can I output a custom taxonomy as a submenu in the site navigation menu?

This is enabled by default if your using wp_nav_menu ( the drag & drop menu’s in admin) and have also set show_in_nav_menus to true for your register_taxonomy.

To enable them to show go to Admin–>Appearance–>Menus

Click “Screen Options” in the top right and you should see it listed there.

ps. The post you linked is obsolete.