Howdy customh, and welcome to CPF,
Check this out:
http://www.batteryjunction.com/tle-6k2.html
Now, this is a drop-in module for a 3-6 cell M*glite, requiring no other mods...... BUT you could use it in a 2 cell light IF you got a couple of 3AA to D cell converters, available here (#16).
http://candlepowerforums.com/vb/showthread.php?t=119033
However, TerraLux is supposed to have a neat new, very bright LED drop-in specifically designed for 2 cell lights in about 2 months..... might be worth waiting for while you look around the forum.
You could also upgrade your reflector (possibly a MOP "medium orange peel") to smooth out the beam, here:
http://candlepowerforums.com/vb/showthread.php?t=150395&page=1
Only deal with that reflector is that you would have to bore the hole out a bit larger to fit the new LED..... but you could get the same effect by "sputtering" a little Krylon clear paint on the reflector...... see here:
http://candlepowerforums.com/vb/showthread.php?t=158870&highlight=sputter
AND finish it off with a new glass lens for 99% transmission of all that bright, beautiful new light..... from here:
http://www.flashlightlens.com/item--UCL%AE-Lens--UCL_Lens.html
You want the 52.1mm by 1.90mm thick UCL (ultra clear) WITHOUT the LDF coating (a diffusing coating that takes your spot beam and makes it into a flood beam, which you wouldn't need because you smoothed it out your beam with the new MOP reflector, OR 'sputtered' your old one, OR left it the same for an incredible, long throwing spot).
Be sure and check out the modder's forum:
http://candlepowerforums.com/vb/forumdisplay.php?f=17
Lots of neat stuff you can do to a M*glite. Look around, and have fun!
Derek