Have you seen this one: http://www.fujibikes.com/road/bike.a...yID=18&yr=2004
I hope that link works. Anyway, it's the Fuji Touring. It's a solid touring bike within your budget. It's not under $700, but I figured if you were considering that other Fuji bike, you could go for a bike of the same price.
Be sure that whatever bike you choose, it is sturdy enough for touring. I don't think some road bikes are set up for the heavier loads of touring, so you want to make sure the frame overall is solid enough to handle the heavier loads, do make sure the bike has the eyelets so you can insert the rear racks (and possibly front rack too if you decide you want to go with front and rear racks), and a longer wheelbase. There's nothing worse than a bike with a short wheelbase that you keep hitting your panniers with your ankles with because the wheelbase is too short! Also consider rims that are heavier and are a bit thicker so they can handle the heavier loads too.
I believe REI has a bike for touring that is under $700, but don't quote me. I think it was called the Novara Rondanee or something like that.
I've toured with a bike with drop handlebars and straight handlebars, and I've had more wrist and hand pain with the straight handlebars. Definitely, going with a bike that has the road bike handlebars would be the best way to go!
I don't think it's necessary to go with a bike that's made for touring. If you go back to your LBS (and try at least a couple of others), and tell them you want a bike with a longer wheelbase and all the stuff I told you about, they should be able to show you a few of the bikes they have in their selection. You actually may need to pay more for some of the bikes that are touring specific, but the touring specific bikes will ensure that you will be absolutely properly equipped with the proper equipment on your touring bike.
By the way, I'm 5' 1/2", and I've never had a WSD before. All my bikes have been men's bikes. So don't be afraid to look beyond WSD. Look for the bike that feels good, you can handle well, and keeps you comfortable.
Good luck and report back!