I have a 1989 Trek 520 that I currently use for commuting. There are a few things that I would like to be able to do on my commuter. I bike a bit more than I drive so I am okay putting some money into it. No matter what, I would like to own just one bike (so the 610 is likely going away no matter what). Here is my inventory and resources for a commuter/tourer:

Wants:
A solid commuting bike and touring rig
Dynamo Lighting
Front and rear racks

Assets:
$400 - 1989 Trek 520 (22.5", everything is working, minor paint knicks on frame/fork, all original but saddle)
$300 - 1984 Trek 610 (531, Shimano 600 crank, 105 derailleur, etc)
$1,200 - willing to put into a new bike or pour into the 520 if I can get what I need

Negatives with the 520:
Has 27 x 1.25 wheels
No dynamo lights
Older components (like the BioPace crank)
Not set up for optional trail/gravel travel

Positives with the 520:
If I keep it, I can probably keep the 610 as well as a back-up bike
It looks great
It is fully functional and sized right

So, what would you do? Put a bunch of money into wheels/dynamo lighting and some upgrades on the 520 or sell the two Treks and get something like a Surly Ogre/ECR/LHT/CC, Salsa/Soma, custom build from frame? If you have suggestions on the lighting situation on a 27x1.25, I would love to hear them as well.