Bigbutterbean,
A lot of experienced and accomplished builders and riders here on the forum would disagree with your statement about balloon tires. I like big feet under me, especially with a lot of weight up above. Heavy frame, engine, gas tank, maybe a transmission, suspension front end adds a lot of weight. I like to have the tires substantial, too, and run as wide as I can get away with. Cruiser tires are great road tires in my opinion. Notice how motorcycles have wider tires? There's a reason.
Regarding the chain clearance issue. Smaller tire width is an option, but I'd try to find a way to keep the fat boy if possible. Sometimes the chain tensioner (if you use one) can be tweaked out a bit to redirect the chain enough for clearance. I'm guessing you have a rag joint. Is the driven sprocket dished in or out? Out will give a little more clearance from the tire.
SB