The drive shaft will flop around when you have it disconnected and while trying to re-engage it with the final drive. I doubt that is what's happening when assembled though- could be wrong. Since you inspected the top end (my first suspicion), could the joint be failing and have some slop in it? Or, are you saying it's the stones- sounds likely.
Hmm, I see what you're saying about just treating the studs as bolts. I think the concern would be that over time repeatedly screwing and unscrewing them into the housing might weaken those female threads in soft metal. It's designed to bottom out in the holes with Loctite to hold them stationary. By tightening the caps on the studs you are then able to get a proper torque setting that you wouldn't be able to accomplish the other way, unless you didn't quite fully sink the studs. Again, I think that puts all the force on those female threads.
Let us know if the grinding goes away after you've reassembled everything and what you decided to do about the studs.