Nice idea, though if rumour sites are right you'll be racing to beat Apple to a similar form factor.
The custom battery sounds like a lot of work but if you know what you are doing.... An adaptor for the HD cable would be much easier for you. The original HD cable is flexible anyway. Powering the LCD could be tricky. If you're building batteries you could power the LCD off the magsafe too. Or Maybe the MacBook's inverter board has enough juice (You won't need the inverter itself obviously).
What do you mean about downclocking to 1GHz without the battery? Most machines scale down when they are running on battery only. The MacBook is no exception as far as I know.
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