When someone asks about REST authentication, I defer to the Amazon Web Services and basically suggest "do that". Why? Because, from a "wisdom of the crowds" point of view, AWS solves the problem, is heavily used, heavily analyzed, and vetted by people that know and care far more than most about what makes a secure request than most. And security is a good place to "not reinvent the wheel". In terms of "shoulders to stand on", you can do worse than AWS.
Now, AWS does not use a token technique, rather it uses a secure hash based on shared secrets and the payload. It is arguably a more complicated implementation (with all of its normalization processes, etc.).
But it works.
The downside is that it requires your application to retain the persons shared secret (i.e. the password), and it also requires the server to have access to that a plain text version of the password. That typically means that the password is stored encrypted, and it then decrypted as appropriate. And that invite yet more complexity of key management and other things on the server side vs secure hashing technique.
The biggest issue, of course, with any token passing technique is Man in the Middle attacks, and replay attacks. SSL mitigates these mostly, naturally.
Of course, you should also consider the OAuth family, which have their own issues, notably with interoperability, but if that's not a primary goal, then the techniques are certainly valid.
For you application, the token lease is not a big deal. Your application will still need to operate within the time frame of the lease, or be able to renew it. In order to do that it will need to either retain the user credential or re-prompt them for it. Just treat the token as a first class resource, like anything else. If practical, try and associate some other information with the request and bundle it in to the token (browser signature, IP address), just to enforce some locality.
You are still open to (potential) replay problems, where the same request can be sent twice. With a typical hash implementation, a timestamp is part of the signature which can bracket the life span of the request. That's solved differently in this case. For example, each request can be sent with a serial ID or a GUID and you can record that the request has already been played to prevent it from happening again. Different techniques for that.