To carry Trangia fuel I would not bother to water down until after the fuel is in the stove. The 5% does not need to be exact - upto about 15% the fuel still burns.
Just fill up the Trangia and then top it off with water from your water bottle
The place to carry the fuel is on the underside of your down tube. (So the other side of the tube to the normal bottle cage). Just fit a normal bottle cage, most touring bikes have the fuel bottle cage fitting as standard
Do not carry fuel inside the main panners.
Never carry meths (or any liquid fuel) close to food as the smell 'taints' even into sealed containers. (If you want to try it, put a sealed Mars bar and a sealed fuel bottle in an enclosed space for 24hrs. Then try to eat the Mars bar)
You could look up "Greenheat" as an option to power your Trangia - They work quite well, certainly worth buying a couple to experiment with. They have the advantage that you can alter the height of the flame