I'll do my best to explain here. First unscrew and remove those 4 white rectangular switch boxes that surround the base of the joystick. From each of these switch boxes remove the silver metal strip as you wont need it anymore. Now you reattach these 4 switch boxes so that the little red buttons that protrude from them are directly N, E, S, and W of the base of the joystick. On mine the red buttons are now about 0.2 cm (~1/12") from the rubber base of the joystick. You'll need to file some little plastic groves off before you reposition and reattach the switch boxes. When reattaching the switch boxes you'll need to use two screws instead of one because the plastic groves that were holding each one in place are not there anymore. Well, that's all I can think of while I sit here looking at the guts of the HotRod.(posted 9189 days ago)You should have a four way joystick if all went well.
I'd only attempt this is you're comfortable in doing so and you really cannot live with an 8-way joystick. The worst that could happen is you do more harm than good, and we don't want that happening to this wonderful piece of equipment.
Hope I explained this well enough.