Based on the Sheldon Brown website, I decided to upgrade the pads on my cheap road bike to Kool Stop Salmon MTB pads (the website indicated these would fit most bikes). But I just tried to put them on and the longer pads don't fit because they are so long that they extend into the area between the rim and the fork, and they are too thick to fit there). The problem area is probably 3/4" long.

original setup:
"Brakes: Tektro 510A ALLOY BARREL SILVER CALIPER BRAKE, Dual Pivot "
Side pull brakes with threaded pads. The existing pads are 2" long and 0.5" thick (the pads are practically new; I'm just experimenting with simple bike projects, and I assume that Kool Stop rubber would be improvement)

I'm reasonably mechanically experienced, but have little experience with bikes. I see a couple of options, and I was hoping to get some advice about which way to go.

options:
1) Accept that I've lost $12 and just buy different pads (Kool Stop Thinline threaded? or Dura Road Holder or Continental? The pads aren't available at LBS, so it's hard to guess which model). Perfectly fine, although I'd like the improved stopping power of the longer pads if I can figure out a way to work it.

2) Use a dremel to wear off the outer side of the pad (rim side would still be flat) so that it fits inside the fork; it's a guess, but I'd probably have about half of the pad thickness left. (There's no asbestos or anything in these, right?) If that's too time consuming, I could presumably just cut off the problem part with a hacksaw.

3) Get different brakes, which might extend further away from the fork. (The brakes are attached with a recessed bolt that goes through the center of the carbon fork.) The only reason I mention this is that I would be willing to buy better brakes anyway if the performance improvement is worth it. (I could also presumably insert some spacers to move the existing brakes out from the fork by 3/4"; the pads are currently at the top of the holders, so there is space to drop them down if I were to do that. But I'm just getting started in this stuff, so I'm hesitant to do ghetto things without the experience to know when ghetto is just dangerous.) If you recommend #3, could you recommend some good brake models to look for?

Thanks for any advice! (I didn't post pictures, but I'm happy to do so if that would help.)

-Nube