Here is an overkill solution:
Lemma: The subgraph $G$ has tree-width at most $2k$.
Proof. Treat all additions and subtractions in what follows in circular modulo arithmetic (for example $n+1 = 1$). Also assume $n\gg k$. Let $L_j=\{j-1, j-2, ..., j-2k\}$ and $R_j=\{j+1, ..., j+2k\}$. Then the path decomposition for $C_n^k$ of $(L_1\cup \{1\}\cup R_1), (L_1\cup \{2\} \cup R_2), (L_1\cup\{3\}\cup R_3), ...$ is a path (tree) decomposition with width $2k$, and so the tree-width of $C_n^k$ is at most $2k$ so a subgraph of $C_n^k$ has tree-width at most $2k$.
Since the tree-width of $G$ is at most $2k$, then there is a $O(n^{O(k)})$ algorithm that finds a nice tree decomposition $T$ for $G$. We can then run the FPT hamiltonian cycle algorithm on $T$ to find a hamiltonian cycle for $G$ in $O(k^{O(k)}n)$ time.
Overall, the algorithm takes $O(n^{O(k)})$, which is polynomial time. I would still be interested in a polynomial time solution without a $k$ dependency, or even with dependency $k$ but simpler.