Here are some suggestions to get you started
1) is it possible (or reasonable) to swap out the front forks and rear wheel assembly with a newer model CBR? (Is it possible to convert to electronic speedo/tach?) I did see a post where someone put a newer CBR600 front end on a CB550 and I believe they had a customer axle bolt made as well as spacers to align the shocks with the front wheel. This site may help -
http://www.allballsracing.com/index.php/forkconversion 2) anyone know of a good seat fabrication website? I'd like one similar made to the Yamaha virago picture I've attached. Can't help here
3) I already dropped the bike on its left side and broke the clutch lever assembly and was wondering what the cable besides the clutch cable is for? That is probably the clutch switch to make sure the bike cannot be started in gear....must be in neutral.
4)is it possible to attach some type of frame slider? There happens to be a small crack on the right side of the engine after dropping it, would anyone happen to know if I have to worry about that crack/can I just repair it with some type of sealant? I am not a fan of frame sliders on any bike so I cannot help you there. You can try JB weld or hit up ebay for a new end cover. I am pretty sure you will leak oil if you do not repair it.
5) would picking up a $1k Yamaha r6 work for parts? (Suspension, forks, rear wheelset?) With the right tools you can make anything fit. Check the website I mentioned in question 1.
6) how could I lower the bike? You can get shorter rear shocks. Keep in mind any changes to the seat hit will effect steering and high speed stability.
7) anyone use new/sportbike rearsets with the bike? With the right tooling you can make them fit. Some people mount rear sets to where the passenger pegs should go but that depends on whether that position is comfortable for you. You can also weld a new bracket to the frame and mount rears set there. That is what I did but I used Tarozzi rearsets.