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Hi I'm looking for an event to use when payment fails.

Currently the only idea I have is using the mage_run_exception event and checking if it's related to the checkout/payment.

Is there an alternative event or potential model/controller rewrite I can do?

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The event you are looking for is sales_model_service_quote_submit_failure it is dispatched in app/code/core/Mage/Sales/Model/Service/Quote.php when the order is submitted and you can retrieve both the quote and the order via the following code:

$quote = $observer->getEvent()->getQuote();
$order = $observer->getEvent()->getOrder();

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