"Death trap" is what is said after the worst happens but you're not there yet

My first concern is about a drop out extender thingy not being contained well enough to be stable/safe over the miles. I remember cutting off fork blades as a kid to extend another bike's forks with... For a short term trial when you are focused enough to check the hardware and fittings before each ride I see little issue But people tend to forget and think the "current state of affairs" will continue even if they stop paying attention (hence many "JRA" claims). If you do find the extender idea works I strongly suggest brazing/welding on the long term thingy.

The lifting up of the front end will change the steering geometry some. For the worse or better you won't know till you try. I do see the merit WRT to this aspect in raising the rear end.

However given all the mucking about mentioned as well as what the different rim brake track radius brings I suggest that you consider a bike with the wheels size you want already speced. Sadly most all the low cost folders are made of fairly heavy tubing and have components that are also both weighty and often lacking sporting qualities. I do have an Automoto 406 rim folder with a Sachs 3spd that could easily leave my garage for not too much $. Andy