Same problem with the keys for my '98 GS 400 and '05 RX 330. I located replacement keys online, but had to use the Lexus dealer to get the keys cut. Had to pay a fee for their labor! The original design of these keys are the fault. This should have been covered by a recall!!! I replace the key for my '98 GS 400 about every 2-3 years. Thought about using some glue but the battery will eventually need replacing in the key. Glue won't work.
Nice troubleshooting, determining the short metal key stub is the culprit.