The light can be removed. If you have panniers, it would end up getting awkward to have the dynamo on the back anyway. You need to put it on the fork. The bracket with that Union set I linked to originally would fiton the forks just fine, remove the tail lamp.
For panniers, you would need either a rack or mudguard mounting lamp. The original Raleigh rack doesn't (I think) have a lamp mounting so that leaves mudguard.
This is a NOS Soubitez mudguard mounted lamp. Period correct for your bike, and brighter than you would imagine (I have one). It will work with any dynamo.
There are all sorts of retro stuff floating around
Ebay and elswewhwere. If you want modern and don't mind paying, go with Busch and Muller or Axa/Basta. It's very high quality. Otherwise buy old but recognised quality brands like Union, Soubitez, Miller, Lucifer, etc. This stuff lasts forever. Avoid any of the modern cheap junk from the far East.
The single most import thing with any bottle dynamo, regardless of who made it is to align it correctly so that a straight edge held along the dynamo spindle will bisect the bike's axle.