Vertical Dropouts

Huh, definitely hadn't thought of that. It's a Diamondback frame from about 10 years ago - good condition, but cosmetically in a bad state (hence the hope it won't get stolen...) so I can't determine any details as to the exact model. I believe it was originally intended as some sort of standard hybrid type frame but may be wrong. Any idea on compatibility issues with the hangers listed? And wouldn't replacing the hanger just give more room on one side of the axle?

True, hadn't thought of that... what does the other side look like? i would imagine that willl be thinner / more likely to crack than the drive side?
I would say it is unadvisable to file away the dropouts, especially a removable one (which is designed to break in order to save the frame in a big crash).

I would say, just keep looking for a magic gear, ask around, borrow some chainrings / sprockets and play with it...