Drupal 7 Bridge
function my_module_authentication_menu_hook() {
  // Note anywhere below that I put return FALSE you should return a failed auth response.
  // Where there is a return TRUE you should return a successful auth response.
  // The formatting of the auth response is up to you with how your Moodle call will react.
  if (!isset($_POST['username']) || !isset($_POST['password'])) {
    return FALSE;
  }

  $username = $_POST['username'];
  $password = $_POST['password'];

  // Functionality from user_login_name_validate().
  if (user_is_blocked($username)) {
    return FALSE;
  }

  // Functionality from user_login_authenticate_validate().
  // You should add flood handling in here as well, but it can not be IP based, unless you
  // supply the IP of the user through your Moodle functionality.
  if (user_authenticate($username, $password) === FALSE) {
    return FALSE;
  }

  // See user_login_final_validate() and implement failed login functionality before success.
  return TRUE;
}