Step 3: Alligator Clip Arms
1) it's cheaper
2) it's more flexible (this is a tradeoff on strength, but since I mostly use it to hold wires or components it was worthwhile)
So, for my DeskSquid all I did was take out the LED and mount a 1" 6/32 screw upside down in the hole with some epoxy, and I used a nut to help me get it center and make it look cleaner. You only need about 1/4" of exposed thread for the alligator clip or other accessory. Get creative with what you've got, some wire, more coolant hose, etc.
To attach these to my main arm I used my #7 bit again to drill holes in the double female connector, the gooseneck actually threads in after cutting off the USB connector, and then I used a small nylon spacer and more epoxy to hold everything in place. This is a little chinsy but it's not a high stress joint so it seems to work fine. I thought about cutting down the length of the arms but it's easy enough to move them, I think you could probably get by with 6" or so of flexible material.
*If you look at the mini-squid you'll notice it too has an alligator clip, I found that a 6/32 screw will actually thread through a 1/8" nozzle, so if you find the right length screw all that remains is to thread on the alligator clip.