I am using 3/4 inch, but I have only fired it once, and that was with coal that could have easily been 75 years old. I observed the fire, and then shut it off. It was small, but I could heat up a decently sized section. However, it isn't anything compared to my little propane forge. I wish I could use propane all the time, but I have a lot of charcoal at my disposal for free and I figured my money would be better spent elsewhere rather than on fuel that I had an alternative too.
Short answer: it will work, but you might need a slightly more powerful air source.
ETA: you may want to check out the Tim Lively washtub forge. It might be more adaptable to your available materials. As far as the railroad spike goes, I personally like them for certain stuff. They make great throwing knives, for example. I have one that my friend affectionately calls "the chunk". It is an entire railroad spike with the head forged into a point and the beveled edge pounded into a knife blade. I sharpened it up, and it will go through 3/4 inch plywood at 15 feet without much of an issue. If it bends, i just put it in a vice and bend it right back. However, it doesn't hold an edge worth spit. Again, YMMV.