Hey I think that is a great project--the chrome looks to be in great shape. And the brakes and crankset are real pluses to me. I'm optimistic that with cleaning, de-rusting, and a little touch-up, the white paint will come out looking good. I've had good success touching up a white PX10--pretty extensively--with just a small four dollar bottle of rust-oleum appliance white touch up paint from Home Depot (followed by some wet sand, polishing compounds, and wax or polish).
https://www.homedepot.com/p/Rust-Ole...7705/100140693
Personally I would try to find a long cage simplex derailleur rather than modify the simplex dropout, I think there are many of those out there from older, lower priced, Peugots from the 70s and early 80s.....