i think you are on the right track with your idea of a peep sight mounted on the top of the cocking piece. At one time they were popular and King sight company made one called the" little Giant" them for MS, Mosin-Nagants, 98/40's and Berthier's like this one.
There are a lot of different sights out there today that could be modified or you can simply make one from a piece of angle iron or aluminum with a carefully drilled hole.