Fuse Box as sub panel

My house needs a new panel. It currently has a Wadsworth electric panel that is significantly corroded and 1 of the two tied together switches on the main breaker are broken. To fix it would cost much more than just pulling a permit and replacing the whole thing with a new panel. So that's what I want to do.

I've done my research on this, and feel comfortable doing it, especially since it will be inspected before the POCO turns the power back on.

Now my question: Can I wire the original (circa 1954) fuse box as a sub panel, which is the current configuration that has been in place since 1966? (I know the history, this was my grandparents house). Currently, everything but the (seldom used) electric heat and the dryer run through the main panel. My plan is to replace the main panel, move the electric range, well pump, and hot water heater from the fuse box and add a second ground rod as per current code. This is the set-up that I feel I can do in a day. This is what I would present to the inspector.

I want to do it this way because I don't want to go without electricity while I route every circuit through the main panel. The current placement of the fuse box is over the hot water heater and under plumbing, so I can't simply put a sub panel it it's place. I do plan to eliminate the fuse box entirely, I just don't think I can do it all in one day. After getting the panel replaced, my plan is to migrate circuits and add circuits as necessary to meet modern standard in the following days and weeks.

So, is my plan a good one? And is it one that will pass an inspection? PA follows NEC 2008, and my township hasn't made any amendments.