Finished repair this morning, ended up going with aluminum pop rivet. First compressed it with pop rivet tool, then knocked out the ball in center of rivet. Finally, I used punch to flatten the end of rivet, it actually smacks down enough so there is no interference once glass is reinstalled. Didn't need to remove any metal from rivet (to shorten) after all, it compressed fine.

As far as rivet head is concerned, I compared my repair with another original untouched vent window assembly, and the rivet head does not stick out any more than the original, so there should be no problem with rivet head rubbing against anything.

On my spare practice frame/ latch, I tried bending and twisting and turning the latch in all sorts of directions to test the strength of the repair, it's solid. Once the glass is back in, I don't think I'll have to worry about anything loosening up for a looong time.