However, while it looks like they make these small enough for a M5 (0.8) bolt (what the Shiv seat-binder uses), it looks like the external thread class requires a M8 (1.25) size, which I’m worried may be too wide in diameter for the aluminum insert in the frame. Any thoughts?
Keensert recommends 1.5x the OD for the boss diameter (parent material) which is going to be something around 0.415" - not sure you have that much material.
Helicoils, to be honest aren’t my favorite, however they are appropriate for use at their thread diameter and typical torques for the diameter - if you overtorque the fastener the helicoil will usually fail before the fastener shears. If for some reason something bad happens, pull the helicoil and install a new one. Not the case - as you’re finding - with a direct tap. Keenserts and similar inserts can also be removed and replaced, but removing the stakes cleanly occasionally proves difficult.
There is also a keensert stud. Not sure if this is a reasonable option, but it seems like you might be able to get away with a slightly smaller edge distance with a quasi-permanent stud. You would then clamp up the seat post with a nut rather than a bolt (which is annoying in its own right)