Confirmed my fix:
In your web.config file you should configure it to look as such:
<system.serviceModel >
<serviceHostingEnvironment configSource=".\Configurations\ServiceHosting.config" />
...
Then, build a folder structure that looks like this:
/web.config
/Configurations/ServiceHosting.config
/Configurations/Deploy/ServiceHosting.config
The base serviceHosting.config should look like this:
<?xml version="1.0"?>
<serviceHostingEnvironment aspNetCompatibilityEnabled="true">
<baseAddressPrefixFilters>
</baseAddressPrefixFilters>
</serviceHostingEnvironment>
while the one in /Deploy looks like this:
<serviceHostingEnvironment aspNetCompatibilityEnabled="true">
<baseAddressPrefixFilters>
<add prefix="http://myappname.web707.discountasp.net"/>
</baseAddressPrefixFilters>
</serviceHostingEnvironment>
Beyond this, you need to add a manual or automated deployment step to copy the file from /Deploy overtop the one in /Configurations. This works incredibly well for service address and connection strings, and saves effort doing other workarounds.
If you don't like this approach (which scales well to farms, but is weaker on single machine), you might consider adding a web.config file a level up from the service deployment on the host's machine and put the serviceHostingEnvironment node there. It should cascade for you.