Hi Bob,
Having given the plans a good dose of looking at I can see no problems with going down to a 1/4" shaft.
Wareagles concern over the drop down is a very valid point, and a radius should always try to be incorporated into a turned down stressed part. It is because of this, if you look carefully at a ball race, it should have like a small countersink on the lead in to the hole, this is to allow for the small radius.
But in this case, I would use 1/4" drill rod instead of cold rolled steel, this will help compensate stress wise for the reduced diameter, plus you will most probably get a better fit to your bearing bores.
What you need to do is print out another set of plans and go over them with a microscope and any reference to the original shaft size should be altered to the new shaft size, and only use that set of plans, otherwise you will make a part only to find you have used the wrong drawing set and the bits are rather loose.
I do this type of thing on all the engines from plans that I build, and usually the designer has over engineered the engine, so this type of modification can usually be incorporated without any problems.
BTW, you can get cheaper bearings on ebay, but they come from the far east and you don't know the quality, plus you have to have the qty and size that they say. Boca seem to have got their act together and give you only what you want, and they cost only pennies more.
I hope this helps
John