Creating tiles for a very long path and correct projection

[RiverTaig1]

I'm pretty new to creating tiled map services, but I'm poking around a bit in ArcMap and have a question. I have a very long path that stretches diagonally across Canada for about 700 miles.  Within maybe 50 meters of this path I would like the highest resolution maps (level 19), but progressively less as I zoom out.  At the full extent, I suppose level 1 or 2 would suffice.  I plan to also expose a feature service for editing simple features including the geometry of the path itself, so ultimately, these tiles will need to be available for disconnected checkout.  Now clearly I can't build a cache for all levels 1-19 as that would be terrabytes worth of data, and of course I don't need level 19 detail 100 miles away from my path either.  Since the path is so long it's spatial extent is huge.  So what is the best way to accomplish this?

Also, a projection question.  The path in question (which I have as a lat/long .gpx file) actually spans 3 UTM zones.  About 95% of it though is in a single UTM zone. Users in the field will have a hand-held GPS and if they are standing on the path with a correct GPS fix it should show the path obviously pretty much under-foot. Positional accuracy is more important than directional accuracy.  What is the best projection to use for this type of tiled map service?

[RiverTaig1]

I think the first part of my question can be answered here: You don't have to have a rectangular extent as shown in this help document. I can create a polygon (a very narrow 50 meter wide 700 mile long worm looking thing) and use that. Then probably create progressively fatter worms for less detailed caches.  The trick might be then to merge caches together.

Another good option for me I think, seems like "Caching on demand".  My initial cache would be pretty much empty, and then I could build the cache by simply zooming in super close and slowly panning my way up the path.  With each pan a new tile is created on the server in its cache directory so that my users will have immediate access to them.  It might be a little slow, but provides the most control.