You can extend the leads, but it's best to keep them as short as possible. I would really try to rearrange things instead and only lengthen if absolutely needed. If you do lengthen them, make sure your joint is very solid, so I would not use a set of bullet connectors to do this. Either directly solder the wires or use
these (strip off the plastic sheath, tip the wires and connectors, solder the wires in each end, and then heatshrink it).
I think you should try to mount the ESC so it gets adequate airflow on both heatsinks if possible. You might have to fab up some type of mounting bracket, but that shouldn't be too difficult.
Use the largest connectors that will work since they will handle more current. No special advice for soldering them really. Just tin the wire and the connector socket so it makes a very solid connection. Oh yeah, and don't touch the connector with your hand when soldering.