500 rpm limit is only for spinning on the spot in non-spinner events... in a spinner event you can go to whatever speed you can!

As for driving it, best bet would be one of two ways - a right angled gearbox or a belt drive off a pancake motor, preferably a brushless outrunner with a pulley press fit onto the can. You'd be looking at either a big brushless (which I'd stay away from as the currently available controllers aren't terribly good and blow up an awful lot, talk to Dave (builder of 360) about how many he's been through) or something like a 28-150 magmotor in order to build a really creditable spinner, though other solutions have been done and worked.

Berzerker (my spinning bar undercutter, as yet unfinished due to controller problems and being pretty occupied atm... I was hoping to make it to the UK champs this year but it didn't happen) will be running off two 4.2kw brushless motors with a fairly unconventional right-angled belt drive, but that's a pretty extreme example of overkill in weapon power... something more reasonable will be easier to build without a ton and a half of machining.

One of my previous designs was an overhead bar spinner actually, but I ran into problems getting it low enough... fitting the right-angled drive (bevel gears in this case) and the 2 large bearings required to support the weapon shaft (which is overhung, remember, so won't NEARLY be as strong as a setup with the weapon supported on both sides) in will be tricky. Running the weapon on a heavy dead shaft mounted to the chassis is probably the best bet as it lets you mount a bearing above and below the blade while still keeping the height down, and then you can drive the bar from a belt drive or a gear... I'd choose a belt to avoid massive deceleration shocks to the motor (which will have a fair bit of inertia in the rotor and therefore you run the risk of damaging a shaft or spinning the rotor on the shaft), but a straight up gear drive has been done (in 360 for instance) and has worked well so far. The other advantage of belts is that if anything DOES get tweaked (i.e. by a huge spinner hit) then they stand a much better change of continuing to work unlike gears, which will bind up with only a very little structural deformation.