Averaging 17 mph for 17 miles means that you have to be hitting 20+ mph for much of the ride.

I don't have all the specs on the Diamondback, but personally I'd start looking for a lightweight road bike. I haven't quite hit the 20 pound mark yet, but the low 20's is quite feasible, even on a budget.

How much are you planning on spending on the new wheels and tires? $200? $300?

Keep your eye on Craigslist.
There are many used road bikes that show up, at least in the larger cities in the $300 to $500 range.

That said, there are some flat bar bike riders that do well, at least for short commutes.

Plan your route to minimize stopping.

I also hate doing "square corners", and use the left turn lane whenever I can expect for the signal to be tripped, or find a big clearing in traffic if the signal isn't tripped.

My current bike, I built up from a 26" frame with narrow 700c wheels and drop bars. It turned out very nice. However, it was a bare forkless frame that I started with, and I wouldn't do that with very many frames.

I'm not sure about the Linear Pull V-Brakes. They aren't popular on road bikes, but are on just about all other bikes. They should work. However, building a bike into something that it isn't can become quite expensive with mediocre results.

Oh, another last note. I'm using 19 or 20mm rims, but the 23mm rims are becoming increasingly popular, and some research indicates that they are just as efficient as the narrower rims.