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I finally got all of those bazillions of bare wires inside the headlight assembly covered. Man was it a pain but I got it done. I covered them using 1/16" spiral cut wrap (see photo). The challenging part was disassembling enough pieces to get to the damage which entailed cutting zip ties, unclipping hold downs and removing the leveling motor. Fun friggin' fun.
I saved myself from having to buy a new headlight assembly but if those wires deteriorate any further, that's it, no more wire covering.