Sorry, when I said the 9speed cassette would work on the 7speed hub (providing it's hyperglide) I was using only 8 of the 9 MTB cogs. The indexing and spacing of the MTB cassette should be identical to the road (assuming all shimano). The mountain hub is indeed wider, but not the freehub body.
At least that's my understanding according to some experience and sheldon brown (rip).
Have I tried any of these concoctions? Nope. I do however have a set of lightweight 10 speed wheels and that'd really jazz up the old Trek. It wouldn't change the feel of it so much as make it more responsive. I could slap a 9 speed cassette on it, pick up some cheap 105 9spd shifters and be done with it.
We'll see, I've got some time to compile parts.
As for the 'if it ain't broke' notion, she really liked my dad's merlin, and she's got a Klein (mountain Klein) MTB. She loved the Merlin and Klein, but never felt comfy on the Kestrel. Can't explain it more if she won't tell me more. Could be the angles of the frame, who knows. At one point the narrow tubulars were ditched for wider clinchers, but still, no bueno.
The 400 as I understand it, is more of a sport frame, rather than a pure race frame. I assume this, and the fact that it's steel, would make it much more relaxing and forgiving to ride. I'm thinking I can make it a tad more fun (hoping rather), given my parts stash.
Thanks again for the help gents, I'll see if I can't get some more info out of her without spoiling it.