Can I shrink my steel rear dropouts to fit a smaller hub? I am rebuilding a 1971 Raleigh International road frame into a single speed bike for college. I bought a set of track wheels with rear hub spacing 110mm. The rear dropout on the Raleigh is 120mm. Will I be able to cold set the frame, shrinking it 10mm to fit this rear wheel? The frame is Reynolds 531 tubing with a lugged steel construction.
One solution might be to add a larger 5mm spacer on the axle, between the outside of the cone-nut and the inside of the locknut.

The risks here are that your axle may suffer from bending easier because its now supporting the bike's weight further out.  Also, you'll probably need a longer axle too because the track wheels are unlikely to have much spare.  Get the strongest axle you can, and I'd suspect a solid axle with nuts will be better than a hollow QR axle.

You could also do both, slightly compress the frame and have 2~3mm of spacers rather than the full 5mm a side, to minimise parallelism changes in the rear dropouts.

 
Spacers are marked on this image of a replacement rear axle.