1.) Get a new Bottom Bracket and 26tpi rings from Phil Wood & Co.:
(right) Easiest and cheapest replacement for the cottered spindle. Kurt from The Headbadge had a small supply of these which are now out of stock. He's looking around for more. If he finds any we'll advertise it here, but since it is an old stock item, it is hard to find. All reports are that it is a perfect retro-fit, but it does not necessarily work well with all cranksets.
Sadly, it seems that as the supply of these spindles dried up in 2012 and they are now more-or-less "unobtainium."
Here is a photo set from flickr showing how someone used a threadless cartidge bottom bracket in 73mm wide frame.
(left) The bottom bracket shell has been narrowed with a milling machine and now new threads are being cut into the bottom bracket shell. The new threads will go much deeper than the original 26tpi ones, so plenty of cutting lubricant is needed and the threads are quite strong. The taps being used are professional tools found in bicycle frame-builders shops. Probably too expensive to be worth buying for a home builder, and unlikely to be loaned out by a bicycle shop.
(left) Here is the complete bottom bracket with a newly-fitted Shimano UN52 catridge. PERFECT FIT! He makes it look so easy doesn't he? I've emailed him about advertising this service here - will get back to you on the price of this work.
Luke informs me that this whole job was done by Alex Meade Bicycle works for $85 US (price at of Feb 2012)