To make the foam donut work with Nimh, just put the donut down into the light so it allows the nipple at the positive end to make contact. It's a little more tricky to position it so it doesn't get in the way of contact, but once set into place it will stay.
The main limitation of this light is runtime IMO. I have been trying to give it a low with a 5 Ohm resistor, but although I can get it to sort of work, all of my solutions require too much space in the tailcap. With the space taken up by my resistor and foam assembly, the tailcap doesn't quite thread on down to the O-ring and it is too wobbly.
Too bad there isn't a *very* flat resistor disk that could be pressed to bypass the resistor for normal mode. They could be used to modify many twisty lights for the addition of a low mode. I have seen people make their own for AA lights, but AAA lights like this have so little room that you really need something that was manufactured and not just homemade for it to work reliably in this amount of space.