What if you surrounded your code, including UseShellExecute = true, with the windows native "LogonUser" method? I've used this successfully in a few projects to do something similar.
[DllImport("advapi32.dll", CharSet = CharSet.Auto)]
public static extern bool LogonUser(String lpszUserName, String lpszDomain,
    String lpszPassword, int dwLogonType, int dwLogonProvider, ref IntPtr phToken
Fresh Click Media did an article about this and wrote a sample Impersonate class: --> http://www.freshclickmedia.com/blog/2008/11/programmatic-impersonation-in-c/
But for completeness, here's my version of it:
public class Impersonator : IDisposable
{
    private WindowsImpersonationContext _impersonatedUser = null;
    private IntPtr _userHandle;
    // constructor for a local account. username and password are arguments.
    public Impersonator(string username, string passwd)
    {
        _userHandle = new IntPtr(0);
        string user = username;
        string userDomain = "."; // The domain for a local user is by default "."
        string password = passwd;
        bool returnValue = LogonUser(user, userDomain, password, LOGON32_LOGON_INTERACTIVE, LOGON32_PROVIDER_DEFAULT, ref _userHandle);
        if (!returnValue)
            throw new ApplicationException("Could not impersonate user");
        WindowsIdentity newId = new WindowsIdentity(_userHandle);
        _impersonatedUser = newId.Impersonate();
    }
    // constructor where username, password and domain are passed as parameters
    public Impersonator(string username, string passwd, string domain)
    {
        _userHandle = new IntPtr(0);
        string user = username;
        string userDomain = domain;
        string password = passwd;
        bool returnValue = LogonUser(user, userDomain, password, LOGON32_LOGON_INTERACTIVE, LOGON32_PROVIDER_DEFAULT, ref _userHandle);
        if (!returnValue)
            throw new ApplicationException("Could not impersonate user");
        WindowsIdentity newId = new WindowsIdentity(_userHandle);
        _impersonatedUser = newId.Impersonate();
    }
    public void Dispose()
    {
        if (_impersonatedUser != null)
        {
            _impersonatedUser.Undo();
            CloseHandle(_userHandle);
        }
    }
    public const int LOGON32_LOGON_INTERACTIVE = 2;
    public const int LOGON32_LOGON_SERVICE = 3;
    public const int LOGON32_PROVIDER_DEFAULT = 0;
    [DllImport("advapi32.dll", CharSet = CharSet.Auto)]
    public static extern bool LogonUser(String lpszUserName, String lpszDomain, String lpszPassword, int dwLogonType, int dwLogonProvider, ref IntPtr phToken);
    [DllImport("kernel32.dll", CharSet = CharSet.Auto)]
    public extern static bool CloseHandle(IntPtr handle);
}
Using it in your case would be:
var domain = ConfigurationManager.AppSettings["reportUserDomain"];
var username = ConfigurationManager.AppSettings["reportUserName"];
var password = ConfigurationManager.AppSettings["reportUserPassword"];
using (Impersonator impersonator = new Impersonator(username, password, domain))
{
    var pxs = new ProcessStartInfo
    {
        Arguments = arguments,
        CreateNoWindow = true,
        LoadUserProfile = true,
        FileName = ConfigurationManager.AppSettings["reportRuntime"],
        UseShellExecute = true
    };
    var px = new Process
    {
        StartInfo = pxs
    };
    px.Start();
    px.WaitForExit();
}