Your RD & FD should work just fine. With the proper BB the Ultegra crankset should also work.

Spreading the rear to fit 126mm spaced hub can be done, but I find my 1966 Paramount rear triangle to be amazingly stiff and difficult to spread. Your LBS should look at reducing the width of the hub and redishing your wheel first.

As far as a freewheel goes, my guess is your RD can handle up to a 28 tooth big cog. An inexpensive new Shimano 5 or 6 speed will work very well in this case. If you live in a place which is hilly, you will appreciate the low gear when you need it.

I look forward to seeing pictures of your bike.