I have the same kind of fly problems, fortunately my pony has a full tail. A fake tail, like you see in western pleasure, is pretty expensive ($100 easy for a cheap one), but they can be braided into the existing tail and be darn sturdy. I've never seen one attached to a docked tail, but as long as the hair grows enough to braid a little bit, I don't see why it couldn't be done. Maybe you could make your own fake tail, just save every hair that comes out of his mane when you comb it, maybe get the word out to your horsey friends/neighbors to save their loose mane/tail hairs, then tie a loop around the middle of the bundle to hold the hairs together, and fold the hair down, binding the top together tightly. Make a loop to braid the existing tail to. It's time consuming and tricky, but it may be worth it to avoid paying for a WP tail for turnout.
For an outdoor fly trap, I took one of the commercial fly jars and packed it full of lunch meat instead of the bait that comes with it, then a couple of inches of water in the bottom to really trap the buggers (stuff that's nearly outdated from your fridge works great, but a couple of hours in the sun makes it pretty attractive to flys anyway). It doesn't smell that bad to walk past, but I'm getting a lot of casualties in the jar.
If worse comes to worse, maybe turn him out at night and keep him stalled in the daytime? This is best if you don't have a lot of nocturnal wildlife in your area and if he has a pasture buddy or two. There are still mosquitoes, but the flies really go down after sunset.
A stubborn horse walks behind you, an impatient one in front of you, but a noble companion walks beside you ~ Unknown