I've heard that adding a suspension fork could eff up the "riding" geometry of the bike but I guess I didn't give that enough thought. I did the math
based on my bike's wheelbase and adding a suspension fork could change geometries by as much as 3 degrees! So with that known, a suspension fork is definitely out.
Unfortunate, but I still feel like moving ahead with the new groupset would be worth the money and effort. I do like how stiff the chromoly fork is in regards to the front brake. Very stiff; gives a great brake feel even with the crap levers and cheapo tektro arms. So there's that.

I gave a bit of thought to the rear cassete and agree at this point that a 42 cog would be a little much. I think I would go with an 11t-38t. That would give me a lowest gear very slightly lower than what I have now but keep the progression nice and smooth. I suppose I haven't stated yet that my main annoyance with the bike is the super steep drop from the 34t ring to the 24t ring on the freewheel. I find myself wanting an in- between gear ALL the time. I find that the only time I use the large chainring up front is when I do especially long and fast hill bombs. Never sees use otherwise. Maybe I'm simply making too much of it, but I can't help but be annoyed by the awkward progression of this drivetrain.

I do have some steep and long climbs when I go to the grocery store (and thus have the trailer in tow) and maybe I'm just not fit enough yet, but I absolutely have to use the 28-34 combo when I go these routes. For reference, I'm 5'7'', 160lbs, and in a lot better shape than most but not what I would consider really "fit". Yet

Regarding the rear freehub, I stopped by my LBS yesterday and they actually stock and sell the full assembled rear wheel for the Escape 2 (freehub) for $60!!
That saves me at least $20 or more (depending on the spokes) and simplifies some logistics behind the build.
So minus the suspension fork plus the factory Giant Escape 2 wheel,that put's the build at $330. Not bad.

The only downside that I can see to building this bike is the inability to easily go to disc brakes. That being said, I've never had any problem whatsoever with
my cheapo v brake setup even in the cold and wet last winter. Yeah, they make a somewhat annoying raspy sound when wet, but they still stop the bike just fine
even with the trailer. I figure with the upgrade to Deore brakes and levers they can only get better, so not really worried about it. I do think I'll be making and adding a "booster" to the rear v brake to help stiffen the stays to give better brake feel though. It's perfectly functional, but quite vague, i must admit..

I wonder if anyone has ever "slotted'' their rim brake rims? You know, the shallow little vanes that are cut into rotors to help cleaning when dirty and wet?
As I happen to be a machinist, makes me feel like experimenting