The vss reluctor gear in the T56 is a 17 tooth gear whereas the 4L60E is a 40 tooth. If you have access to HP tuner you can change the setting in the pcm and the speedo will work. The other options mentioned would also work.
I had to shorten my driveshaft considerably. There is a guy near my hometown that will do the work relatively inexpensive, so I had it shortened and rebalanced which has worked well.

I can shift it pretty quick, but you have to hit everything just right for the 1-2 shift without letting off. The drill mod you are referring to is related to the a restriction in the line on the f-body cars. My line was hard line from the master so it has no restriction.
The problem in my case is that even though the shifter is relatively short throw when you add an 18 inch stick on the end of it, you end up with a throw much longer than say in a firebird or mustang.

The McLeod unit you mention should work fine. I don't think it was available when I did my conversion...or at least I didn't find it.