Got my project

Seriously though, d14vd_h...

1. Driveside dropout. Get it in a vice, mark out how far you want to extend the slot. Drill hole first. Use a small pilot dril, then keep opening the hole out until it's the right diameter. Cut along existing slots to meet the hole you've drilled. round everything off with a small files and emery tape. Take it easy. Mark it out properly.
   
2. Keep the bars. Chop and flop.
   
3. Get a "Cross-top" or similar lever. A dual pivot brake would be good if you can get one cheap. It doesn't look like you'll need a long drop caliper which is good 'cos most of them look shite. I can vouch for that, I've an old conversion with an Alhonga caliper that works fine but won't win any beauty contests.
   
4. Cranks look serviceable. If the BB is not a sealed unit, take apart and pack with grease.
   
5. Get yourself a decent saddle.
   
6. Ride it until it's wrecked. Don't spend too much money on doing it up. Spend a resonable amount on decent rims, you can transfer them to another bike later.
   
   
   

Enjoy it.