Sounds like you don't mind experimenting. If that's the case, experiment and report back on what worked for you. Everyone has a different experience.

Me, I would rather go to walmart/target and get a generic camelback instead of putting an insert in a backpack. But that's me.

I have the same bike you are talking about. I have made 3 changes to it.

1) bought a seatpost bag for a spare tube, inflator, multitool, and energy bar
2) bought a cane creek thudbuster seat post. Makes the bike ride like a cadillac!
3) bought some bar end grips. Just put them on this week and haven't tried them out though.

Other than that, I don't plan on doing anything to the bike other than riding it till it's wore out.