Update for posterity's sake:
I found a nice set of 27" wheels and in combination with Tektro's generic cantilevers, the brakes can be set up with a proper amount of rim contact!
Thanks all for your help. If you have this bike don't even attempt to put 700c wheels on it.
Link for cantilevers:
http://www.amazon.com/Tektro-Cantile...8906612&sr=8-1