Properly configured, the canister light switch is turned "on" by pushing back and backup lights (if anything) hold the switch closed not open. Some canister lights may have the switch installed backwards. I also see divers putting the lid on in reverse fairly frequently. Traditionally the cord goes on the outside to avoid line traps. Some of the newer recessed switch lids may avoid the line traps but sill need to have the switch oriented correctly to avoid the backup light conflict.
You really don't need all those backups, nevermind the bungie loop modifications to manage them.
As your body moves around, the light head (when it's the wrong length) moves back and forth across the top of the canister light. On, off, on, off... Orientation of the switch is pretty irrelevant in that case. Regardless, though, I do put the cord to the outside on mine, as you describe. Frankly, reversing that and moving the switch farther from my body would probably eliminate that particular problem, but again, I don't have it with longer PT (or with the super-short Intova Compact) so it's really not a problem for me that requires changing a thing.
I certainly need ONE backup, since I dive at night a LOT. I feel better with two, and have one to hand off to buddies who are not as well-equipped. And if my wife ever allows me to enter a cave, I won't need to change my configuration from what I'm used to.
Btw: I only use the bungee loop mod on occasion, as the whim strikes me. I can easily unclip my backups with or without them. I posted the photo in response to a poster who was having a specific issue I thought they MIGHT be helpful to manage.