Well...I am one week ahead of you and in exactly the same boat...almost. Here's my $.02:

1. Stiffening the front end...requires changing the fork to a rigid fork for probably $75
2. Putting 700C's on will most likely misalign your brakes...sure it's possible but very costly. Even a new set of tubes and tires for your 26" rims will be about $80.
3. I've looked into putting a bigger crankset up front on my bike. I currently have a 42/34/24 and would like a 48/38/28. The LBS quoted me at a minimum $150 for this.

So, for me, I did change the tires but that still leaves the fork and gearing for an MTB. I'm starting to get some good use out of my MTB...I've put 40 miles on it this week. That's 40 more than I have ridden in the last 10 years.

Instead of pouring money into a bike that won't be exactly what I need, I'm taking the other $150 and $75 and putting it away for a new hybrid. I figure with about a $600-$700 budget, I'm 1/3 there with the money!