Self Mutilating Budgie Question

Hi,

I know this is a heavy first post, but I'm babysitting my fiancee's budgie and he has an ongoing problem with self mutilation that I think is being made worse by the temporary transition to a different environment.

It all started with a medical problem. He has abnormal fatty deposits on one leg that caused irritation and feather loss. The vet put him on a special diet and it is improving. The only problem is that he is now removing all new feathers and tearing holes in the skin of his leg. So, what started as a medical issue seems to have turned into neurotic behavior.

He still has his flight feathers and has a whole bedroom to fly around in, except at night when he goes into his cage. He also has a number of toys and a radio playing when no one is around.

I have kept almost every kind of animal except birds. I've even had rodents that I helped with self mutilating behavior (so I know firsthand how difficult it is to deal with animals who have this problem).
Any suggestions for environmental things I could change fairly easily (I only have him for a couple weeks) to minimize this behavior would be greatly appreciated! I already ordered a tiny parrot plushie after seeing how obsessed he is with his reflection. Any long term suggestions are also appreciated, just keep in mind he isn't mine.