Hi, Danny!
My, a picture really is worth a thousand words, and <nods> I can see the problem you face in mounting your CatEye. Nice photos; they help a lot.
Danny, my first suggestion if you wish to keep the CatEye and mount it solidly in the center of the bracket would be to take a piece of sheetmetal and simply bridge some of the holes, drilling a fresh set to mount the CatEye as you wish. It would only require a simple rectangular plate of aluminum sheet (often available by the piece inexpensively at hobby shops, where they are used on R/C cars and such), and some black paint. In other words, all you would need to do is overlay the existing plate and you'd be all set. If you have the tools (hand tools would do), it is easy to make an entire, custom replacement bracket to replace the original.
I've attached some detailed shots of my current setup with measurements in the hope they will help. You'll note the Radbot 1000 is a clip-on light that slots into a bracket mounted on the Thorn EXP rear plate. I needed to remove the side "wings" on the bracket for it to clear, an easy task on the sander, but a good, sharp knife or a small saw would also do the trick. The designer of the PDW Radbot used to be in the employ of PlanetBike, where he designed their SuperFlash series of lights. Both lights use the same brackets and are interchangeable; the bracket is available separately here:
http://ecom1.planetbike.com/3108.html I think you can see the portion I removed to get everything to fit.
As you've realized, the effectiveness of any LED taillight is greatly dependent on having the light mounted in a vertical plane. If it tips down, the effective brightness is greatly compromised, so yes, it is important to get that CatEye solidly mounted.
any other suggestions for a small rear light like this that they have experience and are satisfied with?
I have been enormously pleased with my Blackburn Mars 4.0 taillight, which provides a 1W output like the PDW Radbot 1000. The reason I went with the Radbot as my primary/mounted LED blinky is because it includes a red reflector which the Blackburn does not. I always clip the Blackburn Mars 4.0 on my rackpack, so I have it in addition to the PDW Radbot 1000 and the dyno-powered B&M Toplight Line Plus, which has a generous reflector of its own.. I will take the spare bracket for the Mars 4.0 and mount it on my ExtraWheel trailer to match another Toplight Line Plus powered by the trailer's own SON28 Klassik dynohub.
In comparison to the Radbot 1000 the Blackburn Mars 4.0 requires only a coin to open and has side-firing amber LEDs for side visibility (the Radbot provides side visibility via a clever prism system and spillover from the main beam). Battery life on the Blackburn is actually a bit better than the Radbot in practice, and I believe the Blackburn is a bit brighter. I'm still seeing green spots from taking the photo with both lights in operation, but I think you can see a slight difference between them. The Blackburn comes with a clip that docks with the mount, like the Radbot. The Blackburn includes a seatpost mount with toolless endless band, and parts can be juggled and cobbled to make a workable rack mount, though not as ideally as the Radbot, which is ready to go. The Blackburn and Radbot lights do not fit each others' mounts, unfortunately. Though I've had no problem with either, I think the Blackburn may ultimately prove the more water-resistant in extended wet-weather use. Either may be easily unclipped and stolen while the bike is parked, so remove them yourself before leaving the bike in sketchy areas.
Here are links to each light...
Portland Design Works (PDW) Radbot 1000:
http://www.sjscycles.co.uk/pdw-radbot-1000-1w-led-tail-light-prod24081/http://www.ridepdw.com/goods/lights/radbot%E2%84%A2-1000Blackburn Mars 4.0:
http://www.sjscycles.co.uk/blackburn-blackburn-mars-40-rear-led-light-prod17935/http://www.blackburndesign.com/lights/mars-4-0-rear.html#.UIc-TSBw6OEHope this helps. If you have more questions, give a shout.
All the best,
Dan.