Thanks to the wifey, I now have a side bag/pannier that doesn't have heel strike issues. I had her sew an additional 12 inches of fabric to my Performance Metro bag and it works perfectly with my clamp on rack positioned high up on the seatpost.
This is turning out to be a very sweet commuter. My speeds are hovering around the same as my full size road bike. (Granted I'm not the world's strongest rider).