Well, I checked the Schwalbe site (great source for oddball tire sizes, particularly for folders) - nothing for 571's except some fancy 23-571's. There are the Schwinn S7's which are 571's but medium-sized just the same. Frankly, I'd keep it at option C for the sake of originality, but I realize you wish to ride the machine and don't care for the balloon tires.

That said, I would gradually work my way to option B, but not until I could source out all the rod brake parts to do the job...preferably, an entire DL-1 parts bike (22" variant ideal for the shorter front stirrup). I wouldn't worry one bit about tight tire clearances. Shouldn't be any different then standard DL-1 clearance.

Take care,

-Kurt