Obviously it's sub-optimal to move the distribution every single time. It would be better if it just auto-detected the correct locations.
I've done a little experimentation with this...
Take a look at http://svn.ali.as/cpan/trunk/Perl-Dist/share/vanilla
to see my experimental replacements for Config.pm and CPAN/Config.pm (haven't done Config_heavy.pl yet).
You might want to try copying those files into your install.
Of course, you'd have to also create a similarly-modified form of Config_heavy.pl... which you would then of course mail to me :)