I know little about Kestrels or 650c tires but I can answer a coupe of your more general questions.

1. There are two ways to get lower gears; either decrease the size of the small chainring (which you cannot do in this case without changing to a crankset with a smaller bolt center diameter) or increase the size of the larger cogs in the rear. Either one of these options may necessitate a new rear derailleur that can handle the larger gear range or, in the case of the larger rear cogs, one that can accommodate larger cogs. Rear derailleurs have two limiting factors when it comes to gear range. 1-How large a maximum cog they will handle. 2-How wide a range they will handle. If you will tell us your current rear derailleur and cog sizes or if you will post a couple drive-side photos of your drive train we can better advise you.

2. Another option for shifters when you change the handlebars to drop bars is to install bar-end shifters.
Brent