I known you can add an outline border with CSS3.
outline: 10px solid red;
Now I was wondering how I can add also a radius to that outline b
Firefox has a property -moz-outline-radius, however the request to implement a similar feature in WebKit was closed as WONTFIX. The plan for the future is to make the outlines follow the borders.
I realize this doesn't help much, but the answer to your question is: currently, no (not in a cross browser way). In the meantime you should use an alternative approach like the one suggested by thekalaban.