that's a pretty solid bike for 130, if everything is structurally sound. just get rid of that ugly stem and handlebar situation and go with the drops like you suggested. I've dealt wiith 2 of these bikes, but in different colors, i recall them weighing abour 23-24 lbs, why the hell is this one so heavy at 28 lbs.....

if you got the money, maybe get a nicer saddle and some black tires, white tires dont really go with that bike. This all depends on if you're looking for a commuter or you want to have a really nice decent bike, or a beater....