I had planned on using the existing battery holder and circuit to power a small LED light at the top. I'd separately hook up a larger LED lamp at the lower position through a home-made bridge rectifier circuit with a capacitor to smooth it out and powered by the dynamo. I'd probably remove the original switch and replace it with a better one (I hear the one that comes on this headlight is pretty low-end) and only use it to switch the battery light on top -I might even keep it as a 3-position switch if I make another flasher board to flash the 9v battery LED.

The Dyno-powered bottom LED can simply be switched by snapping the dynamo to the off position. That's all the switch that circuit needs as if it needs to be off there is no point paying the drag penalty to have it against the tire.

I was thinking of using cheaper off-the shelf LED's. I don't want to spend a ton on this set-up.