Cool wheel set! Those are early Phil Wood hubs with steel centers, and the bearings in them can be replaced. Wonder what the rims are? The shim is factory-issue, I had one just like it on the 1975 Motobecane Grand Touring that was my introduction to this forum's Clunker Challenge 100 series. Prowl around on this site and you'll find somewhere the first four or five pages a thread on converting French cottered cranks over to cotterless, which basically involves replacing the spindle with the right width and length square-taper spindle. I've done similar things trial and error through the years with no ill effect. In my workshop as I speak is a battered Mercier that some previous owner did just that - it has its original French Barden black fixed cup, a well-used Sugino spindle, and an ISO adjustable cup crammed in there, running mis-matched cranks. It works and completes the generalized holy hell of how that bike presents.
I wouldn't sweat the cranks too much - there are lots of tutorials on how to remove cotters. I've gone to using a big metal pipe held over the rounded end, supported against the ground, and using a BIG (2 lb) hammer to smack the threaded end precisely. Coupled with a soak in penetrating oil, it has worked flawlessly without distorting anything.