No thank you for actually helping me work through this. I want my boat to be safe not only for me but for its life as well. I don't want to do a mod that's going to bring down its value or safety.
Here is the rail mocked up with my idea to use the machine screws under the rail and counter sink the back side to provide room for the heads. In all these pictures it seems the heads are to large to work in this fashion.
This is the stock fastener.

This is a new pan head phillips machine screw

This is a button head hex drive, which seems to have the smallest profile.

This is a hex head bolt.

And this is another issue. The center of the rail is 9/16". The center of the holes on the boat are 10/16" or 5/8". Which would cause the head of any machine screw to be off centered if I were to clearance the back side for the head of the screws. This would weaken the rail and cause possible failures.

I have ordered the next size up, a Radial 52 rail to test with it. It won't be here for a week and I won't be back home for 3 weeks from now so the process is going to take a while.
Another option would be to drill new bolt holes lower to line up with the center of the Radial 40 rail, If i wanted to keep the actual through bolts under the rail. Problem with this route is that if they ever need to be tightened then the section of rail would need to come completely off. So trying to through bolt under the rail may be a fools errand anyway. It may be best to simply through bolt the rail and joint in one go.
As for the sealant, from the factory there was none. The new vinyl rail doesn't give much support and is very flexible. I was leaning to use 4200 as it less permanent and somewhat more flexible, but I was thinking that maybe 5200 may be the better choice to add a bit of rigidity that the aluminum rail added that will now be loss.






















