I rooted around the web a bit and found something interesting:
http://lazycat.jp/battery/battery01.htm

My Japanese is lacking but if I follow the pictures it points out that the BA-1328/Us are pretty close to a AA battery. Difference is that contacts are both on one end on the BAs. Which is an issue but, as the pictures seem to show, some AAs have shells underneath the plastic label that bring the negative up the battery and this is similar to what you see on the BAs.

The AAs might be a little thinner, particularly after you remove the label, but a wrap with duct tape should make up the difference.
If the existing steel shell isn't a good enough contact or you need a shoulder up top I would use some copper foil, available at a craft store. Handy stuff to have around.

I think that with some handcrafting and experimentation you might be able to make a substitute for the batteries you need. Dependability and reliability will very much depend on your craftsmanship.

On the other hand these distress markers were originally intended for emergency use. I'm not sure I would be trusting my life in rough conditions to lights that are over thirty years old and handcrafted batteries. At the very least you might do well to consider that while these units were state of the art in the early 60s or 70s they very much represent obsolete technology. There are better units available now.

I have no connection to these folks but this represents a fair selection of what is available:
http://lrse.com/SearchResult.aspx?CategoryID=111

For real emergency use, particularly if you likely to be in a difficult environment, like at sea, I would go with the USCG/SOLAS approved strobe:
http://lrse.com/detail.aspx?ID=727

It isn't cheap, $69. You might find it cheaper elsewhere. But alone on a dark and stormy night twenty miles offshore in cold sea isn't the time you want to find out you should have sprung for the slightly more expensive light.

If your substitute batteries work you could still use the distress markers for less demanding jobs, like as substitutes for road flares in your vehicle. Or to let the pizza delivery guy know which house to come to.

Recycling is good but there is a time to move on and pension off the obsolete gear to lesser jobs.

When your life is very much on the line you don't want to be regretting your thrift.