I always fly with a flashlight, but I am a uniformed crew member and flashlights are part of our flight kits. To be honest, the TSA does not confiscate anything...if they question an item and then advise you that you cannot take it on the plane, they give you the option of getting out of line and going back out to the non-secure area. At that point you could mail the flashlight back home. Most stuff that the TSA ends up with is considered to be "voluntarily-surrendered". The only exception to any of this is if they see a gun in your bag....Then you are handcuffed right there and then. A friend of mine found this out the hard way.
Basically I see two issues you have to address....
1.... The cranulations on the flashlight. Correct me if I am wrong, but are cranulations not used as a means of stabbing....Thus it could be classified as a weapon. But cranulations are removable and replaceable. I would suggest you consider that option.
2.... the Lithium batteries... Those MUST be carried on and secured in a manner that the batteries will not arc or short on anything in your bag. A good battery carrier, the original box, or just some scotch tape wrapped around the ends will accomplish this.
There is a wealth of information at the TSA's website. Including a list of approved and not approved items. But there is also a statement on that same page that allows any TSA officer to deny access for any item they deem dangerous, whether it is on that approved list or not. ATTITUDE COUNTS.. be courteous and if you disagree with a TSA officer, politely ask to speak with a supervisor. However in the end if you are denied access because of any item you have in your possession, be prepared to mail it home. I suggest you have a bubble style envelope ready in your bags. Arrive at the airport early enough to get through security and allow for any hiccups.
