If I was going to build a 22 LR upper on the cheap I'd use this 16" TACCOM3 barrel. http://www.taccom3g.com/barrel---steel-16-.html
The only way I would use a 1:12 barrel is if I wanted to be able to occasionally fire 5.56 in the barrel using a standard conversion kit. I still think the dedicated 22 LR upper is the way to go. With the price of forged lowers being so low it just makes since to me to eventually buy a lower to use with the dedicated 22 LR upper.
If you have access to an A-2 fixed front sight with bayonet lug you can thread the holes from the cross pins and attach the front sight base using Allen screws. I used this setup on one of my builds and it has never come loose. I used the CMMG dedicated 22 LR barrel but at that time they were about $100. I also used Red Loctite to help hold the front sight base.