That's a nice frame! I'd go with that frame and rely on ebay or other sources for wheels, later.

You can always find good wheels anytime, it's the right frame that's hard to find! That would be great for both your grass/gravel/concrete/asphalt commutes and your xc treks, as well!

I say go with it, my friend!

Make sure it's the right size, though!

I'd sand that frame and rust proof it with JP Weigle's frame saver. Then I'd paint it a matte black. I'd switch over all salvageable and adaptable parts. I'd then get some decent derailleurs and wheels__Done!

I dunno, on second thought, that frame might not look that bad! I think I might just sand it in spots and touch it up a bit. It depends...I can't really see it that well from the photo. One thing for sure, though...It's a keeper! Once you get that Tassajara fixed right, she'll be rendering you service for the rest of your days. If you want, you could make her look real pretty, too!

Meanwhile, I'd just ride the last roll out of that old puppy 'til I was set to switch over. Since it's too big anyways, there's no need trying to fix it, other than using temporary means.

Good Luck!

PS.

I think disc brakes aren't all what they're cracked up, to be! Cantis and V's have always worked for me...Besides, V's are just too easy to adjust and replace. They're cheaper, too! Canti's are somehow more reassuring, though!

After disassembling the bike, I'd take those wheels to an expert for closer inspection. There should be some youtube videos on wheel inspection and repair.