Just a quick update on this, over this last weekend, I finally implemented pfSense with the forwarding of DNS/DHCP to one of my Linux systems where I configured the DHCP with static IP assignments, and to my initial shock, I got everything right and everything is "just working". Thanks for the information and pointers on how to get this configured. Now to figure out how to get the hostnames I have configured in the DHCP static assignments to populate instead of the hostname that the devices are reporting...

For future reference, problem was caused by a misconfigured setting in General Setup -> DNS Server Settings - DNS Resolution Behaviour. Setting changed to Use Local DNS, Fall back to remote DNS Servers