There are some great ideas in that design, and some that could be improved.
The cradle part for the surfski nose I think is a stroke of genius - but then having a bouncy connection is not so great. Hmm - That is a difficult one. I'll think on it a bit.
Drilling a hole in the bike frame is not good. Just make the top bit of the rack shorter, then provide some extra bits that can bolt down to standard rack fittings (or P clips). P clips used to be sold by bike shops but are also available from plumbing suppliers.
Regarding that rack - - using flat Al bar means it will flex a lot. Square section tube will be much more rigid. Minor niggle though.
Were you restricted to what wheels you could get? Those look to be running just nylon on steel. Fine for low speeds and short distances, but the nylon will quickly wear and heat.
The castor to protect the rudder is a great idea.