My solution to this problem was pretty simple and straight forward. All you need is an IIS server running inside the domain.
Setup CNAME in DNS to point to the IIS server, using host names in IIS to resolve several sites on a single IIS server. I'm using the same IIS server to farm out a few sub domains to external sites.
Then in IIS setup setup redirection for that site to go to your offsite site/path, in my case it was our hosted catalog that I wanted catalog.ourdomain.com to go to. From here all the tweaking is done in IIS. Be sure to enable anonymous authentication so traffic will not be blocked.
