Is there a clean way to expose a WCF REST service that requires basic authentication, but where we handle the actual validation of the username/password ourselves? It seems
If you host it on IIS, using custom http module is the way to go. You can bring over the principal over to WCF side to do code access security. See HTTP Basic Authentication against Non-Windows Accounts in IIS/ASP.NET (Part 3 - Adding WCF Support). Also see Custom HTTP Basic Authentication for ASP.NET Web Services on .NET 3.5/VS 2008.
If you are not using IIS, you should be able to implement userNameAuthentication. See Finally! Usernames over Transport Authentication in WCF.