Quark.....
"Please, please. please, do not over-think this problem !"
your statement above shows that you can think along the right lines, but because the answer to this problem is a very simple one. if you add complexity then "you will not be able to see the forest for the trees !"
I am pleased that you understand there is a correlation between space-time and energy.However, the only way you will truly be able to understand our reality, will be when you can work it out for yourself, its not difficult and I will do my best to assist you by offering you clues......
You mention time expanding and becoming space...... "What you need to do, is think about what happens when space condenses into time."
Have fun and let me know your conclusion.