If this is going to operate on a working railway it will need some sophisticated interaction with the signalling system and the signallersYes. It would, at least, have to reliably operate the track circuiting and folding stub axles wouldn't do that. It would need some method of informing the signallers that it was going to fold up and when safely clear of the running track. If the signaller was not aware of these and saw the track circuit clear unexpectedly, their immediate reaction would be to stop all trains in the area, as it would look as if there had been a derailment.
unless it is so small that a train could destroy it with absolutely no damage to the train or to any other railway infrastructure.I can't see Network Rail even agreeing to that.
If it is being designed for use on the UK rail network I reckon you need to talk to Network Rail before you spend more than a few hours scoping out the project.If it was able to activate a track circuit, imagine what would happen at an automatic level crossing. It would enter the section, the lights would flash, the barriers would close and 30 minutes later this thing comes trundling along at 2 MPH! Another 10 minutes later, the gates will open to allow the traffic on the road to cross. If it's not destroyed by an irate motorist in the first few weeks of operation, I'd be most surprised.