We have a whole suite of Web UserControls already that are written for and used in a "WebSite". I see that all mentions in EPiServer documentation are WebProject. So, EPiServer can only run a compiled WebProject right? If someone could clear this up, I would really appreciate it.
Yes, you´ll have to use a web application project. You should easily be able to reuse your existing user controls. Here´s an overview over the difference between the two project types (Microsoft also recommends using web application projects going forward): http://msdn.microsoft.com/en-us/library/dd547590.aspx.