That's a beaut. I love the gussets on the frame!
(Doesn't know anything about electrickery so bypasses those questions)
I think you should go all out (budget permitting) and get chrome bits redone, get a shine on any alloy with a buffer and rouge and generally get her going as a modern classic. If you're going with alloy rims they'll need some polish too
I think if you're keeping it original in spirit you could upgrade to a modern dynohub and just retrofit it into the lamps. Maybe find a second set so you can keep the originals original.
Colours? Dark and marroon sounds good, though I have to say I do like the current duck-egg blue. If you go dark, I think it's almost compulsory to have the rear of the back mudguard in white for night visibility - it just looks classy!
Colours to go with black guards? The ubiquitous British Racing Green? Burnt Sienna would be nice as would a pale hospital grey-green with holly green mudguards.
Looks like a great project bike. I hope it brings joy in the transformation!