Well, it's been a little over a year now, and due to your good advice, I have commuted 1200 miles since this thread was started. I took the advice on the 90's mountain bike and started with a 17" HardRock ($85 on CL). I bought new wheels (to convert to 9 speed), Deore 9spd shifters, M591 derailleurs, and put about 300 miles on it. I was feeling a little stretched out, so I found a 16" HardRock ($45 on CL) which was even older, I had to cold set the rear drops to get the 9 spd wheel in. I moved all the parts over to it, rode about 800 miles, then upgraded to a Sugino xd600 165mm crankset for another hundred miles or so. During this time, I was starting to realize that I wanted drop bars. So the game plan was, find another 16" HardRock and build it out with dropbars, then turn the current bike into more of a beater. Last week, I found a very good condition HR, all original with nice colors (see photo). I spent the past three days shopping like a kid at Christmas and here is what I have on order:

Cane Creek SCR-5C Compact Road Brake Levers
Nitto Randonneur 42cm 25.4mm Silver bar
Kalloy 26.2 x 350mm Silver Seatpost
Grand Cru Zeste Cantilever Brakes
NITTO Periscopa FU-82 - Long Quill
Transit 50 Wedge Bag
Velo Orange Touring Pedals
Soma Urban Cross Levers
Velo Orange Touring Saddle B17
Shimano SL-BS77 9-Speed Double/Triple Bar End Shift Levers
Shimano HG61 9-Speed 11-32t Cassette
Bike Ribbon Cork Natural
Sugino XD600 165mm 26-36-46 74/110 7/8 Speed Crankset
Shimano UN55 68x113mm Square Taper BB

I was contemplating the Velo Orange honey leather bar tape to match the saddle, but thought I would start with cork first. I'm also putting cross levers on it for braking from the flats.
Also, the bike I just got was a 7 speed, so I won't need a new rear wheel and it has nice Weinmann rims.
In all, I'm currently at $850 for the bike, counting the $125 purchase price.
I had been thinking about building up a Soma Saga frame, and still may, but I already know the geometry of this bike, plus the parts can transfer later if need be. And with identical drivetrains, I'll be able to swap out the wheels between the two HardRocks (I'll have fat street tires on one and smaller commuter tires on the other).
At any rate, thanks for all the great advice, it's been a great year commuting and I'll be posting more photos of the build in the coming weeks.