Finally got back to the Canyon install and my bolt issue. I went through the procedures above, and loosened the front brackets as well. Never heard a clunk or actually saw the engine move, except with a jack under it. I was able to move the brackets enough to find a better alignment, but I thing the real issues was that the front tire was turned to the side. When the tire is turned the center stand twists and the bike moves. the center stand is directly attached to the frame and engine right below the lower engine mount. That twisting must cause the engine to raise a small amount causing the front mounting bolts to bind and not align correctly. Once the the front was pointing forward, and I jiggled the front brackets everything lined up so there was not binding of the bolts.
On a side note, I ran a tap through the threads on the right side mount to hopefully restore them, since I managed to strip some of the end threads. Thought it worked ok...guess I was wrong. Can't get the right side torqued too 44 ft-lbs without it popping over. I'll have to see about putting a thread healer core in there to fix it.
Interesting note about front wheel position affecting engine position. I never considered that, as mine was on the center stand with the wheel pointed straight ahead, and I had no reason to move it.
Also, I did not have a jack under mine. If you had a jack under the engine when you loosened the rear bolts, then obviously you would not hear it drop.
Bummer about the stripped treads, but as you already know, a Heli-coil should take care of it.
I am curious about one thing, when you were able to jiggle the front brackets and see the holes line up, did you have a jack under the engine supporting it? Mine did not, and the holes were dead center in the brackets.