i hope i don't get in trouble for this but, if i were you, i would leave that bike alone.

two reasons:
1. french bikes, particularly older ones, are tough to convert. i'm not saying you can't do it but it can get hairy if you want to add new parts (esp. cranks, stems and bars).

2. that bike is hot as is. some folks will say, "if ain't fixed its broken," but i say to them, "get over it and ride your bike."

my advice is to hang on to the Peugeot and find an older nishiki, univega, fuji, panasonic or any of the japanese schwinns from the 80 (which should be more plentiful than Peugeots) for the same price and convert that. ultimately, i'd bet this will be cheaper and easier.