"Any chance the bushings could feed from the top"

I have not seen the transformers myself except for the pictures you see. Maybe there would be enough room to form the conductors around the side and connect them at the top but at this point that is a very expensive proposition. The conductors of both transformer would have to be replaced, because I do know they are to short for that. Both ends re terminated and some bracing would have to be added in the enclosures to support the conductors. Extending the bushings with a plate could be an option if that doesn't put them to close to the doors. In fact T&B make a bracket specifically for that.
Like Radar said I don't know what they just didn't use bare wire. It's a live front transformer anyway and as long as all the clearances are met it shouldn't be a problem.
Highpotter, wouldn't the arrestors only blow if they exceeded their rating? How often does this really occur?