Can I get away with a standard drivers license now that its only two axles?
Why do you think having 3 axles is an issue in california? You're still under a HISTORICAL VEHICLE exception. I know that I couldn't keep Classic Car insurance if I change out the engine in my M38A1 to something more powerful. I've been driving my 5 Ton Tractor Truck for three years with only one minor hold up when I was getting on base. They delaid me two hours only to find out that I can drive my 3-axle 5 Ton, as a historical vehicle, as long as I'm not towing a (semi) trailer. (They told me "ANY" trailer, which I'm 100% sure they're wrong about. Any semi trailer, sure.. For that I'd need a Non-Commercial Class A, - which I already have a learners permit for!)
Is it still possible to register it as a CA historic vehicle?
It has to meet the qualifications, which most deuces do. If it's 25 years old? You're probably good. If you think a bobbed deuce is a Historical Vehicle, then do you think a "rat-rod" is? Why or why not?
Does the brake system need to be inspected by a DMV person?
No, the brakes are hydrolic. The fact is uses an air system to assist the brakes is not important. The M series vehicles air system is backwards in comparison to civilian trucks. If you loose air on a civy semi, it gets stuck!
Here it is in black and white:
http://dmv.ca.gov/pubs/cdl_htm/lic_chart.htm