So I put four nuts in the middle (one on either side of L and R metal bracket) and slid a couple of washers in to make the whole thing tight. Looks like this:



Couple of things I noticed as I was doing this:
1. it's way, way easier to work on if you take out the 2 2mm allen screws that hold the metal bracket into the bulb housing.
2. The main reason this is so crappy is because they are using the inverse mount from the way the metal bracket was designed. Look at the mount at trailtech.com:



and notice it connects to the inner part of the metal flanges, with the tightening force applied to the outside..

3. Following from 2), the Topeak Moonshine HID uses the same bulb housing but a different mounting bracket and handlebar attachment.

I mailed them to see if these can be bought separately, as this would get rid of the problematic piece entirely... will update if/when I hear back.

4. I tried rubber gaskets , actually size 0 Flat Washers from the plumbing dept. They fit perfectly but they compress too easily to maintain friction . Nice thought though.