I added a bit of rubber (from rubber band) to the bottom of power button and it was enough to make the necessary contact with electronic dome button. Not high tech, but it works, and I'm still not sure if a new part would have been any better. It's possible the specs on this are so narrow that once the button looses contact, there's no way to get it back without a spacer.
I am having the same problem as others report, where button does not 'click'. External button seems fine, but so does orange dome. If I depress orange dome with fingernail, it firmly clicks and then bounces back. It seems like perhaps the physical button isn't pushing far enough into the phone to activate the electronic button. I thought perhaps there was a missing piece inbetween the two that gave the button leverage, but no one mentions that and I see no spare pieces floating around inside my phone. Perhaps the electronic button (orange dome) is broken enough for the physical button not to be able to depress it, but not completely inoperable?
I'm tempted to add something in between the two (clear nail polish?) to narrow the connection. I don't mind buying the proximity sensor and doing this procedure again, but I'd like to have some confidence that it will work before doing so and right now, I don't have that.