roberth33tiger, thanks for the link -- that certainly looks like a much sturdier solution than anything I've seen... However, mounting that high with the short reach arms on the 535's makes me concerned about heel-strike. Perhaps if I mixed that with my "solution" below...

I've been kicking around ideas all day on anything I can do to get the basket to work with the parts I have. I happened to have one of these on hand as well, so I gave it a shot: http://www.modernbike.com/itemgroup....178148&TID=367. After mounting using this technique, I ran into the ever-present problem of heel-strike (should have expected it on a basket this large, I suppose). I ended up moving the basket mounts to the bottom holes on the mounting arms (attached to the rack eyelots near the dropouts), so quick release interference is no longer a problem and the basket sits further back. Unfortunately, since the basket sits further back, the distance to the upper mounting point was significantly greater -- I used some brackets to span the distance. It feels reasonable sturdy, but who knows... My concern is since the angle from the basket to the dropout mounts is so acute, significantly more weight will now be handled by the upper mounts, which is probably not ideal since it is jury-rigged. The metal portion of that monostay adapter that wraps around the monostay is quite malleable as well, which makes me wonder how strong it really is.

I'm feeling more that this is probably not a good solution -- I should probably just keep the basket around for another bike, perhaps, and find a decent rack and panniers for groceries to stick on this bike.

Pics of the updated attempt:
http://i65.photobucket.com/albums/h2...s/P1000283.jpg
http://i65.photobucket.com/albums/h2...s/P1000282.jpg
http://i65.photobucket.com/albums/h2...s/P1000279.jpg