UPDATE WITH PICS:
I was brave enough to unscrew the whole thing again and re-cut another key.
I did try slightly bending the spring with a needle nose pliers and it didn't break but when it's even slightly bent in, it throws off getting the pin back through all the holes, so I bent it back to original shape.
I grinded down a new key, this time constantly checking it back into the LM and making sure it was tighter. I was much more generous with the amount of metal I left on the key.
To my surprise I was fairly EASILY able to put it back together and screw it in. This time the new key is tight as all heck. It doesn't sit as flush inside the LM like the previous key but it has zero wiggle. It sits tight open and closed.
HERE IS A MAJOR TIP TO REASSEMBLE THE LEATHERMAN STYLE CS:
1.) Have the scissors open all the way, don't even bother trying to screw it back together with it closed or half open.
2.) There are TWO parts to the scissors (the 2nd being a tiny loose piece that acts as the spring
Line up all your tools and get the pin through them and get the main part of the scissors (the handle of the whole leatherman) into the pin too, leaving the pin almost closed
3.) ever so carefully slide the 2nd part of the scissors spring into the line up and get the pin through it.
4.) very gently squeeze the whole end of the LM together with a pliers pushing all the tools as close to each other and the top pin as close to the bottom GENTLY!
5.) screw the tiny screw into the pin! DONE!
Sounds like common sense, but I hope this helps somebody. I spent 4 hours figuring this out the first time and took me only a couple minutes the second time. Amazing I never damaged anything on my first go around.
Here are some pics:
THE BAD KEY:
Looked good to my eye and fit sweet into the LM but it was wiggly and flopped around.
This photo shows the key sitting on top of the blade. The arrow points to the tiny piece of metal that is vital to keeping the key tight. If anything, leave MORE on there than the original tool. Keeps it VERY secure especially when open.
THE FINAL RE-KEY
Looks great, I even got a key that is painted with a three-dimensional stainless diamond pattern like you see on trucks.
Thanks again everyone for the inspiration, time for me to enjoy my new keychain!