I have seen the can motor upgrades for the Tycos. But, the open frame motor with the new magnets, and with the excess motor lash fixed, run rather well on DCC. No, they will not perform like a $300 locomotive, but they also don’t have to be run at Tyco speeds neither.
I have several of the AHM 4-4-0s, and Bachmann 4-4-0s, and a bunch of can motors to upgrade them with. But working out the motor mounts, and all wheel power pick up, has become more of a challenge then I am willing to deal with at the moment.
I could have isolated the motor brush the way you described, but I was afraid that over time the edge of the motor frame might cut through the insulation. It probably would not, but I wasn’t sure. A package of nylon screws wasn’t that expensive, and with 12 in a package I can upgrade 12 locomotives. Currently I think I have 10 running, and 4 more I am working on.