10-1/8" BB height is a great opportunity, not a problem. You will get to find out how great a low BB rides, rather than learn at third and fourth hand of the terrors it poses. If there is any problem, any problem at all, the steps to take are simple. Don't use wide pedals. Do use a narrow crank, which means older. 170mm cranks are fine, 165s will be much better than 175. With one-sided pedals, or with clipless, you will have lots of clearance.

If you do ground a pedal you will not pole vault. Does not occur. Problems occur if you have been primed to panic, and then do so. I grounded a pedal just yesterday. Didn't particularly want to scrub metal off a very old 15S pedal, but now it knows it has been used and loved. I am way too old to be falling, grounding a pedal does not risk that.

I've used bikes with BB as low as 9-3/4 - 9-7/8". Ron Boi used to race on a bike he built himself with 101mm of drop, which comes out to something like 9-3/8". Lots of Cinellis had 82mm of drop, which would be 10-1/8" on a small tire and you don't hear about how awful Cinellis were.

At one time that lugset was fairly common. I've seen it on relatively ordinary bikes and seen it on three lugs chromed specials. Removing paint is dead simple. Putting it back on gets difficult.