No problems with extending the screen, I've done exactly what you described before with no problems.
As far as the DVD drive goes, what you said would work. You could also buy an external enclosure such as this:
I have that exact enclosure, and it looks big, but inside, it really is just a USB to IDE adapter (and a small power supply to power the hard drive/CD-rom you have in it). If you gut it, it shouldn't take up much room.