Shim the frame's headtube, get a 1" headset. Make sure you get a headset that fits your fork's crown race seat. Also, make sure your fork's steer tube is long enough. Yo can make your own, or buy some ready-made shims, like the Problem Solvers Headtube Reducer. http://problemsolversbike.com/products/headtube_reducers You'd need 1 1/8" to 1"...
Good luck!
Ps- you'll need to work around stem issues, too....