With anonymous FTP, how did you handle the incoming directory?  Did you 
  authenicate your ftpd?  or do you have a world writeable directory?

We leave the ftpd unauthenticated, and acl the incoming directory like this:

% fs la incoming 
Access list for incoming is
Normal rights:
  itd.archive:apollo_archivists rlidwka
  itd.archive rlidwka
  system:anyuser liw

You should be aware that 'i-r' rights are enforced at the client, not the
server, so a suitably modified client can still read the files in the
incoming directory.  This shouldn't normally be a problem.

  Our ftp deamon will automatically uncompress and whatever your file 
  for you, and it does it in the same file space as to where the file 
  resides.  How does one handle this?  authenicate the ftp deamon?

I wouldn't think that would help.

  If you did authenicate the ftp deamon....  How did you do this?  

See "Long Running Jobs in an Authenticated Environment," by Rubin and
Honeyman, CITI tech report 93-1.  CITI tech reports are available at

gopher://gopher.citi.umich.edu/11/public/techreports

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