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I managed to get some an old SR Royal 'Extra Super-Light' crankset recently, very cheaply and they are beautifuly machined/lightened versions of the Royal cranks with a flute on the back, they are VERY light, also the matching quill stem and seatpost turn up occasionally and have nice cutouts... the lightest headset I have is the needle/roller bearing Stronglight A9, but can be a btch to setup.
Aende TT bikes often have amazing weight saving tricks on them..
-for my two penneth worth..!
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To be honest, if you put a 650c where a 700c front wheel was you will lower the bottom bracket a bit and risk pedal strike on cornering, BUT if you were to use an old 27" fork as opposed to a 700c close-clearence fork it might equalise it a bit.. the front brake would need to be very long to reach as earlier mentioned.
-Good luck
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If you havn't seen this AENDE yet I recommend a look..
This TT bike is bloody amazing, everything drilled and SUPER lightweight...http://www.ebay.co.uk/itm/330649048888?ssPageName=STRK:MEWAX:IT&_trksid=p3984.m1438.l2648
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Bought a 22 inch fillet brazed one on the bay a year ago for absolute peanuts, 1948, plain guage 531 for a 27.0 seatpost, with the original metal headbadge and Lytalloy seatpost clamp, it was for 26" wheels so 700C fit a treat.. just had it refinished and it looks like it was made yesterday - lovely frame. They do pop up on ebay regularly and are often very cheap, I own several different models, most of which looked like basket cases but are so damned light and ride lovely.
I'm riding a 1950 Raceweight to work at the moment with the same lugs as Knowthejo's. Good luck with the project!