nice! good find. That looks like a good frame. You should be able to use those cruiser wheels. They will be 26" wheels, rather than 700c/27" wheels, so the bike might be a little screwy. The bike wil lbe lower to the ground, increasing peadal strike, and possible affecting geomtery... Also the brakes might not reach.
Maybe those cruiser wheels won't work....
you should be able to find a decently affordable old road wheelset for $40-$50 if you look hard enough. they might need some truing stand love, and the hubs might need to be overhauled, but that stuff's easy enough.
If you do go looking for the older wheelset, try to hit something pre-Shimano, maybe early 80s. That will allow you to unthread the freewheel and replace it with a BMX freewheel. The good news is that if you can find these, you can probably get them for dirt cheap since they're old and incompatible with modern freehubs. You might even be able to find a NOS built up wheel.
Also, since I think that thing originally came with 27" wheels, you should be able to stick in a 27" or 700c.
Boston: I thought it was a good frame when others where talking about how they where using their Le Tours for fixies.
OneTimS: Unfortunatly, I was hoping to finish the bike off for under $50. (I lost my other bike)Where would you find old road wheelsets? We have a Bicycle Kitchen up in LA- what would probably be the only place that has pretty good used parts, I'd assume.
As recent as 2003, 7 speed hybrids were coming with Freewheels. I used mine on my SS w/ a Shimano BMX freewheel. Finding some around might not be so hard. They might be a little wide, mines 622 x 20, so I don't think I'll ever try a 25mm tire. But, if you were thinking cruiser, then the little extra width might not matter. I think the hub thing started more with 8 speed than with a particular year, but I may be wrong on that.
Shimano introduced the freehub in the early 80s, but they didn't take off until they introduced 7-speed SIS in the late 80s and only offered it in freehub flavor. Ever since then, it's been freehubs with the technology filtering down from high-end to low-end parts.