I may not be the king of cobble, but I've taken an arc welder to sheet metal to get things done. Without picture's i've got a hard time visualizing how incorrectly it is sitting.
The first thing that comes to mind is this:
If i didn't have another machine to focus on, but i had a saw and a welder.. I'd get to chopping. But if i did have other frames or options, I'd follow suit and mess with something else. Big engines are fun and all, but if you can't enjoy them, then whats the point?
I imagine that re positioning the rear shock can help quite a bit on height. Bringing the bottom mount closer to the engine should fix the height, but leave you more prone to bottoming out. you'll need a new rear shock.
The something like the VTX forks would be a place to start on the front.
When the money has been spent, it may have been wiser to invest into a new frame. You can find all kinds of stuff on craigslist.
Picked up a couple rollers the other week. One would probably suit your set up well. Yamaha Warrior. It's sturdy. The other will collapse with anything more than atmospheric pressure. It's Chinese (I was obligated to take it).
I just wanna go fast. If your not first, your last!!
Reproducing the Tecate CDI. Contact me if you need one. I'm most accessible on FaceBook. You can find me on the 1984-1987 Kawasaki Tecate KXT250 Group.