No good way to do this currently in Joomla 1.5.
Here are a couple of suggested methods.
http://joomlafare.com/joomla/joomla-tutorials/6-changing-a-login-menu-link-to-logout
http://www.m4d3l-network.com/developpement/php/joomla/how-to-show-menu-to-guest-only/