Given the bike you exampled is a home-painted 27" conversion with stamped dropouts, you'd likely be better off finding something like this http://toronto.en.craigslist.ca/tor/bik/1332767383.html or this
http://toronto.en.craigslist.ca/tor/bik/1332098131.html and spinning a BMX hub on yourself (which is pretty much all that was done on the bike you posted. Once you decide you like SS, then consider going fixed. You could probably do this for around $100 or so, maybe less.

My experience with racks is to stay away from seat post mounted ones. You can't get near as much on them and they're not rated to carry that much weight due to the torque they generate.

What I did originally is buy a fixed/single wheel, put in on an old Apollo frame (27"/***) rode it for a year or so then found a nice Ciocc on ebay for $150 and it's been a great conversion for me.