The light being ahead of the transistors seems to be a key factor here that I'm not getting.
If you are thinking that the order of the components matter in a series circuit then you are not getting to grips with how electricity works.
A circuit has to be considered as a whole electricity does not hit anything first.
why does all voltage run to ground and not power led when circuit is closed?
What circuit are we talking about here, that last one of mine or your original one.
For mine
The circuit is from the battery positive, through the flash lamp thus lighting it up, through one switch, through the other switch and then to the battery negative.
For the original one there is no LED in it and I don't know where you have it connected, but with both transistors on the current goes to ground and the voltage on the collector of the top transistor is at ground. So an LED connected from the top transistor's collector to ground will have no voltage across it and so will not light up.
However if the LED were connected to the collector of the top transistor and to 5V then when that collector was connected to ground the LED would light up.
There are two ways to control an LED the first is called sourcing current and the second is called sinking current
Note all LEDs must also have a series resistor. That is why I draw a flashlight bulb to make things simple.
Note to everyone except the OP. I am simplifying this by assuming that Vsat is zero, it isn't but that fact doesn't matter at this stage in the argument.