The way I see it your idea to rig some simple rake adjustment at the bow is a good one. The only problem is how much adjustment you will be able to get. I'm assuming you're going to have to be able to stuff a portion of the tang inside the luff of the jib in order to get the tack on the jib low enough. I would rig a more conventional forestay and jib halyard with a jib cloth adjustment under the foredeck like most other 505s. It won't be tied to your rake adjustment, obviously, but if you're not planning to race at the highest levels I don't think that's a big issue.
This one would be great for a museum somewhere. Not to say it's not worth sailing again but it's quite a nice piece of furniture and the cost to get it sailing again far outweighs its performance potential.
Holy shit! That is the exact boat that was in that horror movie! I was flabbergasted watching that once, holed up in a hotel room on a business trip. "Look--a Flying Dutchman! In a horror flick!"