We tinker in similar areas. The idea of cutting down a flare to a "fire starting size" is something I have worked on. The biggest issue for me was closing up the cut end in such a way that it was a good seal. Best I have found so far is a pvc end cap/plug. Just about the right size to fit into the flare casing, held in place with some good yellow glue. The ones I have used also have a multi sided end that would prevent rollling if placed on a flat surface. I also added a bit of para cord for holding in the event the burn was longer than expected. A small hole drilled in the end cap to pass the paracord through with a knot on the inside and then sealed with glue worked quite well.
The idea of mixing some smokeless poweder with the flare material and creating a paste sounds pretty good as well.
None of this seems to be an "explosive" combination from what I have read.

Bald Guy: this is a bit off topic. Have you ever considered using pieces of heat sealed soda straws to hold your flare innards? I use this to hold cotton-petroleum jelly tinder. Perhaps the flare material would ignite better. If so, I may try putting a pair of strike anywhere matches (probably just the head + 1") in the top of the straw before sealing.

How readily does the flare material light a) with a match and b) with a spark?

You know sir, you never fail to amaze me with the level of your knowledge, and your ability to pass that knowledge along in terms that a simple guy like myself can understand. I am pretty tied up for the next few days, but first chance I get I am going to get some acetone and some fine powder (maybe pull the bullets on a couple of .22's) and see what happens. Thanks. Results forthcoming...