HIDs do actually run cooler than halogen bulbs, so there is no need for a different heat resistant material for the housing. The housing I bought is actually not a dodgy retrofit but a proper replacement unit and has the same waterproof sealing as my stock headlamps.

I haven't fitted mine yet, but a friend bought the same housing and HIDs and it looks real schmick and he has had no water issues at all. properly fitted headlights would definitely be the stealthiest part of an illegal mod and the power lines to the HIDs would need to both be protected well and hidden well. I have seen some excellent jobs done where you just cannot find the cabling or even tell they aren't stock (without considering the fact u know the vehicle manufacturer doesn't supply that option for headlights) so you do need to either do a good DIY job or have someone do it for you really well.