Tires and Wheels
Depending on how off-road you want to get, a 19" front wheel can work just fine. I had a DR 650 that I ran with a 17" rear and 19" front, and it did pretty well off road and was amazing on road. No doubt, for extreme off-road, a 21" front would be best. However, in most dual sport situations a 19" front can work well enough.
The other consideration is that there are plenty of stock 19" HD front wheels out there and you can have your choice of spoked or cast wheels.
The 16" rear wheel is a bit more of a problem in that there are not many off-road tires available for 16" rims. I have seen some Sportsters with Duro 16" dual-sport tires, and that seems like a good solution.
On my 96 Sportster I run a 19" front and 18" rear combo and that seems to work well. I ride the Sportster mostly on the street, with some light gravel roads, so I don't know how well it works in real off road situations, but it works real well on the street.
Only other thing I can tell you is that if you expect to ride in mud, only real knobby tires will work. Dual sport tires don't seem to provide much confidence in mud, especially, on the front end of the bike
Good luck with your project, I am looking forward to see where it ends up.