Nice job,
i'm also into a "slight" transformation of my Rally...

in an 90's street racer style.
Your master cylinder option is very good, my handlebar is slightly dropped (90SS style) with PX milenium master cylinder.
What type of fork will you use? I've got an early PX one with 16 mm Grimeca disc brake and a good old T5 front mudguard, but now i'm not sure about the result.
I've already done the same thing thing one my TS 15 years ago but now

The rest is "period correct" with folding kickstart lever, giuliari super-corsa seat ,etc...
Any idea about the Worb5 Rally front disc conversion?
Keep us informed of your project.