My fork measures about 101 mm inside diameter, and the outside diameter is 112 so each side of the fork is about 5.5 mm thick.

My axle is 108 mm long, and the locknut-to-locknut distance is 97.5 mm meaning that 5.25 mm axle length protrudes in to the fork with a 0.25 mm clearance deadspace on each side of the fork.

My question:

I have to squeeze the fork about 3.5 mm when I mount the wheel. Any problems doing this?

That could be dangerous, but the biggest reason is that you've only got that 0.25mm of "deadspace" for your skewer's conical spring to be compressed into. In that situation, the ends of your quick-release skewer actually may not be clamping onto your fork's dropout, they're just bottoming out on the pancaked conical spring instead.

I'm guessing your wheel is missing some washers between the locknuts and cones. Pics?

Actually I replaced the cones and the new cones were a little larger. I compensated by using thinner locknuts. I could actually use the larger locknuts but that would diminish the length of axle that actually protrudes into the fork, by 2 mm. I was concerned about having too short a length of axle in the fork.

Comment?

I am not a professional mechanic, however if you are not bottoming out your quick release threads, by which i mean you can finger tighten them to the point that you are unable to flip the cam into the lock position..I think you are fine. you are squeezing your fork, minimally, from what i can tell once your fork blades are compressed against the locknuts there is no difference in what is going on when you tighten your QR as when things fit "perfect".

EDIT did not realize you were using a frankenstien wheel. as you have since clarified. i still may be right, i do know that a modestly oversize locknut width is no big deal. however it is possible that your QR skewer doesn't have enough threading/room inside for it to work properly. if you CAN tighten it and secure it as per normal you are probably fine. also as long as your axle protrudes into and a little past the outside of your dropouts it should be plenty.

How about picking up some 1.2mm spacers from your LBS (there are usually chainring spacers available in that width that'll do the job), install them between your cones and thinner locknuts, and then you'll be just about on-target. In the meanwhile, if there's any doubt about the issue I described above, leave out your conical springs for now.