Okay, I resolved it. I was thinking, I only want the offset to be in the X and the Y, not the Z. I added a compMask after the clamp and was able to fix it! <3
EDIT Thought I had it fixed, only sorta. I added a sphere like @hippowombat said he did, but it makes my player have odd shadowing on it (cause it has to cast the shadows to the AO stuff to make this effect work) Any thoughts around this?