[soapbox] I, for one, must absolutely recommend against altering the ride height of the vehicle. Having built many systems, both taller and shorter, from scratch I can tell you there is much more involved than just moving an axle and getting new u-bolts. Do you like calculus? You best polish up on it if you want to engineer things to be safe and have predictable dynamic handling. [/soapbox]
You need to really think this project through. You are talking about WAY more work than I think you realize, as well as expense. Things add up quickly. On top of that, you might really run into some issues with your license and stuff. I was your age not so long ago and I know how high schoolers (and college students
) operate. I predict big trouble.
Now that said...the more work you do yourself the less it is going to cost. The more time you take the better your results are going to be. It's just that simple. For instance, it would cost a bundle to have a professional tint the windows, but you can buy tint yourself in bulk and do it for a reasonable price. Just be prepared to take a couple cracks at it before you get it to work.
I would not alter the rub rails. Many here have and that's a personal decision, but they ARE structural. Look at their location. They match with the floor height, with the seat rail height, and even with the bottom of the windows (torso height). Those positions are not be coincidence. However, if you decided to grind off the rivets and remove them I would simply get a rivet gun and put rivets in the holes after they're off. That's easy enough.
To deck out the interior is going to be A LOT of work. Plan on a few days just cleaning things to get a solid base. Then there is framing and finishing work that can get staggeringly expensive. Check out Jason's work (lapeer20m, jacuzzi bus builds) and look at some of the stuff he has done. He does fantastic work. Also look at the time and investment.
Are you planning on using the bus for more than just prom? It won't have much resale value so I hope you plan to build it and use it yourself!
You will have to research Ohio regulations yourself, but I have a sinking suspicion that registering as an RV will be difficult without meeting criteria that will put a hamper on the pimp-mobile status of the bus. No one wants to drink a cocktail while perched on a chemical toilet with Tiesto pounding and neon lights flashing.