Re:
I'd just do as your original question and reduce the OLN width if you are using a 5 speed freewheel - if using a 6 them the width needs to be 126. The difference between 126 and 120 is in the RHS spacing...... So if you want to lose say 4mm you may find there is a 4mm alloy spacer which you can remove, you can then (by adjusting the locknuts & cones on both sides) centre the axle, but ensure it isn't too wide because the quick release MUST clamp onto the dropouts (ie not an over-long axle). If the axle is too long after spacer removal, just cut the odd (say 3mm) off with a junior hacksaw and clean up with a file. If you want to adjust by small amounts, a standard (hardware shop) washer with 10mm hole is ideal at about 1.5mm thick...... so as an example, remove an original 5mm spacer, replace with a 1.5mm washer and you've reduced the width by 3.5mm. Check the rim is still central (or close enough) by trying it both ways, it is unlikely you'll have to redish the wheel with a small adjustment. I'd only (and that's my personal opinion) go the route of spreading the frame if using 6 speed or more.