I see your safety net concept - if the share price were to jump to $5 (hallelujah) the loss on the short shares would be limited by converting the warrants at $0.95 than having to cover (buy shares) at $5.

If the shares are shorted at $0.80 with a view to covering at $0.50, then the shorter is expecting a gain of $0.30 vs a loss of $0.15. ($0.95 minus $0.80). This is assuming that those shorting the stock also have warrants already at hand to cover, without having to buy them in the market (probably - 'duh').