Unfortunately, it appears Dragon may have used an example of this conversion that wasn't the most common type.
If you go on the IDF Armor Blogspot their is a TCM-20mm photo that appear to have separate panels on the upper portion of the side panels. In a few other pictures, the upper portion of the sides look to be separate as well. This also seems to coincide with the extra "polygon" panel addition - 2 on each side.
The Azimut TCM-20 conversion also had these features as well.
It may be that some of the conversions were done on M-16's. It does appear that at some point the panels were welded to the main side panels.
There are pictures of vehicles with smooth upper portions, and then some with the extra "stuff" in the upper portion.
It may also be as simple as "everyone" has used the same example that was not a "real" example of this halftrack.
Look at the one at the Israeli Air Force Museum which comes up in every search. Has the upper panels, "square" ammo boxes on the turret
As for some of the concerns:
3: As the other writer said, the dash was changed when the diesel engine from the M113 was installed - the dash was pretty much the same as the M113. So if you are modeling a TCM20 from the 1970's it is a proper dash.
4 - Don't cut the .30 machine gun as instructed. Wrap the post molded to the gun so it looked covered and bend it slightly. That should resemble the actual mount which looks like a typical hull mount. It looks like it was bolted right to the dash. One of the typical dual .30 box holders was mounted on the floor between the front seats.
8 - Apparently sometime between 1967 and 1973 the Israelis started mounting M113 tailight assemblies on their halftracks, it looks like the basic personnel ones got them first (for station keeping) and then it went through the fleet.
9 - You're right, can't use the included headlights without the "solid" grill The proper headlight frames are in the kit - D10, but not the actual headlights.
11 - Which ammo bins? the ones mounted on the turret are square and the ones in my kit (Q1) for the rear have the sloped top.
What is hard is deciding if the TCM-20 you are modeling has had the diesel installed. Some of the ones that appear to have the solid grill front, but not the under fender muffler housings. At some point they may have decided not to put the engine in but the vehicle still got the newer headlights.
One thing that is apparent is that even in 1967, the IDF was painting the front wheels and the track assemblies black, regardless of what other updates had been done to the vehicle.
Modeling the IDF is always so much fun