If you're not going to refinish the paint, then the crusty beehive is the way to go. I will say that I prefer the brushed aluminum rims over the black enamel one, so hopefully you'll get the fitment worked out.
TRM beat me to it, but yeah, it's far easier to source a replacement axle! I use hex jamb-nuts to hold the axle secure in a bench vise while I do the filing--one side then the other. Helps keep everything nice and parallel. Go slow and deliberate...you can always take off more.
Looks like the disc adapter simply spins onto the hub, like a freewheel would. Which would make that a rear wheel, reversed and mounted up front? Now, I'm curious, too.
For that style of intricate pattern, I'd suggest that frisket paper is superior to common masking tape. Find it in art supply stores. It's likely to eliminate any pesky bleed-through and deliver crisp edges.
Wildcat's right, except pedaling backward was low gear, forward was high. You can see how the top chain line goes to the smaller of the two rear gears. It's essentially two freewheel assemblies mounted to a single hub shell.