Bicycle Mechanics - replacing drive train questions

I am planning to replace the drive train on my trusty 1992 Trek 820. It has the original Shimano 200GS components. The chainrings are showing some wear and I would like to lower the gearing to preserve my knees and avoid mashing up hills. The trigger shifters and derailleurs still work flawlessly.

Crank is riveted 48-38-28. I have an older Shimano Deore crank that seems to match the original well so that the chain line is preserved. I wish to put 44-34-24 or 46-34-24 chainrings on it. Will the original derailleur work with the smaller chainrings?

Freewheel is a 7 speed 12-28. I would like replace it with a Nashbar 7 speed 13-32. Will the original derailleur work with the larger geared freewheel?

If one or the other are not compatible I may decide to change gearing on just one, replacing the other with same as original gears. I doubt that I would be replacing derailleurs and shifters on this bike.

Any recommendations for the chain?

I hope it's not a 7 speed cassette.

It is a 7 speed freewheel. I real would like to replace it soon as the availability of freewheels seems to be shrinking fast. I may even buy a spare for the next replacement.

Any comments on my compatibility questions?

New megarange derailleurs aren't that much. If your old derailleur doesn't work, you can just get a new one. Plus, you can continue to ride the bike while you wait for the new one by simply keeping it out of 32.

It is a 7 speed freewheel. I real would like to replace it soon as the availability of freewheels seems to be shrinking fast. I may even buy a spare for the next replacement.

Any comments on my compatibility questions?

You are seriously worrying about nothing. Babac and 7 speed shimano freewheels aren't going to go anywhere, anytime soon.

I've rehabbed a few of these early-90s Trek 8xx bikes in the past year. Here are some suggestions from a fairly budget-oriented perspective:

1) Consider buying a 3x7 or 3x8-speed name-brand mountain bike off Craigslist solely for the wheels (at least the rear wheel) in order to switch to a freehub-based wheel. Swap your old freewheel into the "new" bike and sell it on craigslist. If you clean it up, you might even get more for it! Now, you can use standard cassettes (you'll need a $2 spacer for a 7-speed cassette on an 8/9-speed hub); I'd stay away from Nashbar/generic cassettes due to build quality and stick with SRAM and Shimano.

2) Buy a new SRAM X Gen front derailleur for $9+shipping (I bought a few from these folks: http://shop.vendio.com/benscycle/item/921220753/?s=1249804561 - recommended!). It's universal (shims for the 3 major seat-tube diameters, can be used either top-pull or bottom-pull) and good quality, and designed for a 44t large chainring.

3) Consider a new Shimano Deore rear derailleur for $22+shipping. (I and others have had good luck with these folks: http://www.cambriabike.com/shopexd.asp?ID=33426 ). It will work fine with 7, 8, or 9 speeds.

4) I'd strongly suggest installing new cables & housing with each derailleur, and new brake cables and housing. These are the cheapest stainless steel cable kits (including housing, ferrules, etc) that I've found: http://www.pricepoint.com/detail/15789-050_ALISF6-3-Parts-49-Cables/Alligator-Super-Fortress-Cable-Kit.htm If you shop for the parts separately or at your LBS or go for galvanized, you might be able to pay somewhat less.

5) Check if your BB is holding up. If not, you might consider buying a lower-end crankset & appropriate-length square-taper BB. The $40 Shimano FC-M442 has replacable rings, and the 22t small gear will give you plenty of easy pedaling up hills: http://www.universalcycles.com/shopping/product_details.php?id=19141&category=380

6) Don't forget a new chain! The same folks as in (2) above have an SRAM PC-830 chain (with included masterlink) for $11: http://shop.vendio.com/benscycle/item/2010476235/?s=1249804561