I looked at the HN paper, and I don't see them using the time-symmetric propagator to characterize the self-interaction (as Davies does). They seem to be assuming that only positive energies characterize this interaction (eq 5.1). In that approach, you would still get divergences. But this is unnecessary, and I think inappropriate for the direct action approach. That is, they appear to be assuming that there is a response of the universe in such self-interaction. This assumption in my view should be questioned. In Davies' theory (which I think is the most straightfoward application of the direct-action theory to QED) the self-interaction is only via the time-symmetric propagator; there is no 'response of the universe'. That is why no energy is conveyed in the self-interaction. Again see my paper on the distinction between interactions involving absorber reponse, which gives rise to real photons (Fock space states), and those, the true virtual photons, which are only via the time-symmetric propagator, and which do not lead to exchanges of real positive energy. There is much confusion about this point in the literature, and I attempt to clarify the issues in this paper (
http://arxiv.org/abs/1312.4007)
Regarding the full absorption boundary condition, the existence of charges is not equivalent to a condition on the volume of spacetime. These are two separate issues.
Thanks again for your interest in these ideas.