Is the implied deletion "made do"
Nearly a million people lived there, making do, as they always had [made do], with candles, torches and lanterns.
i.e. the "as" clause modifies what immediately precedes it. If it modified the main verb clause, which of course makes sense, it seems to need a new order so that the emphasis and rhythm confer meaning appropriately:
Nearly a million people lived there, as they always had lived, making do with candles, torches and lanterns.
seems better as it is the people - the subject - that have persisted rather than the implied consistency of how they coped - which probably is not what was "always" present.