OK...I've messing around with options (neoprene insulation, etc.) and I think I found the perfect tweak that solves the fit issues.
I am naming it the "Biker-Tweak®".
I took off the velour oval pads from my HD600's and laid it on top of the square leather pads that come with the H2. They fit perfectly without touching the plastic grill, create a perfect seal, are comfortable, and don't seem to affect the sound (to me, anyway). The rounded corners of the Senn velour pads block a small section of the open grills, but I don't hear any bad effects.
The soundstage is still from the back of your head to the tip of your nose, and the bass is untouched.
You can dance with them, lay on a pillow, and another great feature is, because you have to widen the headband a little, the wire springs do not touch the top of the headband or the sides of your head and act like the Audio Technica adjustable bands.
Now they sound great, and are super confortable. Since they weigh next to nothing, you now don't even know you have them on.
I suppose a DT-880 or HE-60 velour pad would accomplish the same feat, and I have an extra pair of 60 pads in the garage and will try them later (the circumference seems a bit smaller).
The way they are shaped, you don't even see the pads when looking in the mirror. I'm going to put 2 tiny pieces of velcro on the top and bottom during the experimental stage so I don't damage the original pads.
I can snap some pics, if anyone can't picture what I'm describing.