At the risk of seeming contrarian, I personally have built wheels for
my Raleigh Sports using 26" rims and mounted upon them Schwalbe
tires in a lightly treaded 1.5 " width and used them for a number of
years here as an around town ride.
I like them very much, but i did have to seek out a longer reach brake
to make the modification. I am much more into function than form,
and these rims are pretty bomb proof.
You seem much more concerned with the appearance of your
wheels, and you ought to be able to do this without taking
a bunch of crap from some guy who is too dumb to realize
that the customer is usually (but not always) right. If he really
said that about IGH's, then I'd go elsewhere.
If your brakes are the ones that came standard on this bike, I'm
dubious that they'll actually reach the rims if they're 26".
Where do you live, possibly one of us could hurt him for you?
Edit: I just reread this, and if the rims are 597's, they are the equivalent
of what some of these bikes were sold with as original equipment (26x1 3/8 S6).
Most of the others were 590's.
So while you're a little more limited in tire choices, you cannot
complain about authenticity. Here's a link to Sheldon Brown
on rim sizes............
Measuring Bicycle Rim Sizes