Well, the horse isn't getting the cover he seems to think he needs in order to win, so that it's hardly a valid point to keep arguing that he would be a shoo-in if only other horses were bustling around him. If the trainer and the rider know the horse is a habitual hanger, then why aren't they correcting this trait better? He may be hanging because he's tired himself out (see "he tends to pull hard") and therefore his speed is dwindling anyway, which still means he wouldn't have caught the one in front and passed him. You aren't likely to be getting much cover in the final stages of any race, so once he's in the clear, if there isn't something else battling away either side of him, he will hang.
Seems the horse has created two habits for himself, uncorrected or uncorrectable: pulls too hard against himself and expends energy doing so; tires in the latter stages and drifts away. You might as well say run him against the rail, which will keep his eye in on a line, and forget about cover which may or may not oblige. If he really does need some sort of object against which to rely for concentration, at least the inside rail is always there.