You're fine with those dropouts. Use any gear you want, and set the chain length accordingly (add or remove links to get the right length). You only need 1/4" movement at the drop for tensioning. Your's are plenty long.

Them drops are fairly rigid so I'd space the axle 3mm each side. Saves the money for a reset and ensures parallel dropouts. Won't matter much anyway, but might as well be straight, huh?