My hybrid has 29er wheels on it already. They are 2mm narrower than a typical 29er rim, but you can definitely mount a 29x2 on them without issue. So for option 1, new frame & fork, this has cost advantages. For option 2, I won't get into the 29er vs 26" debate but I'll just reiterate that I would buy a 29er.
As far as why I need a real MTB-- here's older footage of one of my local trails:
http://vimeo.com/18488340
There are some new sections that are tighter and tougher. This one is about an hour and a half away:
http://www.youtube.com/watch?v=n79vJUBPhjI