I will need to go back and check how I have it wired, but it is very simple.
As far as I know, there is no good way to remove the mic element from the middle section of the mic case. I just clipped the wires going to the bottome section, and then wired them up to the little transformer and airtight phone jack.
You are correct about those big transformer/converters - that is not what you want to use. Instead, it is a little transformer, about 1 inch square and maybe 3/4 inch deep. You just wire it up in line between the mic and the jack.
It may be that a SM57 won't work out due to space constraints inside the accordion - it just barely fit on mine. Like Larry and DP have pointed out, there are other mic element alternatives that are smaller and/or don't require a transformer. But, I have used the R-65 elements and now the SM-57 and they get the job done for me. There are plenty of people who go that route, and it seems to work for them. I got the idea to try the SM57 from Leroy Thomas a few years ago when he was in town.