the battery will be ok on a rear rack. Just try and get the rack as low down as possible near the rear tyre, and definatley make sure you have plenty strong fastenings on the side arms of the rack. When you go around corners there is going to be a lot of weight pulling on the rack. I had this problem with just the GM 48/12 batt(6.5kg). I've secured the rack with Hose Clips onto the frame.
The battery thing will be a bit trial and error. If looks are not too important but a low centre of gravity is then you maybe able to strap the battery under the diagonal lower main frame tube (where you would put a crud catcher on a mountain bike), obviously it would have to miss the front wheel when turned and the pedals/your foot.
Not sure about widening the crank, it's definatley worth trying if you can get a longer bottom bracket for the crank arm. you will find that there will be little problems like this to overcome when making a DIY build! - I did!!
You could have got two 36v 12ah aluminium batteries for the same price and put them either side of a rack in pannier bags.
Andrew