The 14500 battery is only 14mm in diameter and is 50mm long, so it would not fit snug in the original design. Plus you won't get very much run time out of them (even when using a flexdrive), because they are only like 400mAh. Most of us like the 18650 because they are 2400mAh, which lasts so much longer.
IIRC (please correct me if I'm wrong), the DDL driver has a voltage drop of about 2.25-2.5v, so lets says 2.5v to be safe. The PHR diode needs 4.5 volts, so you need at LEAST 7v to run the diode without damaging it. You could use two 16340 3.6v rechargable, which are 4.2v fully charged. However you don't want the voltage to drop below 7v, because otherwise you can damage the window of your diode, or even LED it. IIRC, the 16340 at full discharge is around 3.2V, so using the DDL driver with only two lithium ion cells is not really safe, you'd want to use three. But the host won't fit three so, in my opinion, you're better off getting a flexdrive and using a 18650 or one 16340.
