Sorry, I should have been more specific. The 500-600 is for the bike + any upgrades it will need. I have all the camping, clothing and other gear already.
I understood this was your "bike" budget.
You can easily exceed $500 on front and rear racks and panniers (and even panniers alone). The cheap version is still $200-300.
A used BOB Yak trailer at ~$300 is possibly your least expensive option, since it doesn't require a dedicated touring bike - almost any bike can tow a trailer. Although harder to find and more costly, I recommend the Burley Nomad over the Bob Yak if you start considering trailers seriously, since it's 2-wheel design prevents the trailer from tipping over as you load/unload cargo. It makes a better grocery hauler too, if you decide to keep the trailer after tour. Also, it's much easier to sell used trailers on ebay after a tour than to sell used racks and panniers, particularly inexpensive ones which tend to last only 1-2 trips.
You'll also want a lock, taillight, headlight, helmet, mirror, slick tires, spare tubes, patch kit, some tools, chain lube, fenders, possibly a better saddle, new cables, housing, chain, brake shoes, maybe different pedals and shoes, replace that worn middle chainring, cassette and rear derailleur, have your LBS tuneup your wheel truing/spoke tension, etc. Shazam - 500 bucks gone before you know it just from outfitting and reconditioning a used bike for a PCH tour. That's why I said just fix up your present bike.
Craigslist is worth a look, but you'll be waiting forever for the right deal in your size. It took me years of diligent, miserly shopping to build a bike from parts purchased in this manner. I got my parts from ebay, nashbar, jensonusa, aebike, and others.
Or, just forget my comments and go buy the bike you really want...
Here's an interesting Panasonic, although it has 435mm chainstays (same as your Trek mtb). A LHT would be a better choice, even at higher cost.
http://www.yellowjersey.org/posd7.html