Good looking Trek. I've set up my early 1990s Univega somewhat similarly, from sorta-mountain bike to more commuter mode. Albatross bars just below saddle height, with Shimano bar end shifters.
I used compressionless cable housing so I could try index shifting. Nothing wrong with friction mode, I was just curious. When I switched from a wheelset with 7-speed freehub to another with 8-speed I got a MicroShift 8-speed cassette that's supposedly Shimano compatible. It does index shift well from the 11-28 cogs, but won't reach the 32T cog unless I'm in friction mode. But that's a limitation of the original Shimano Exage rear derailleur, not the bar end shifters, cable/housing or cassette. If I really need that 32 cog I can switch back to friction mode, or buy another RD. Resetting the RD mount or wheel spacing might help too, but I haven't really needed more than the 30T chainring and 28 rear cog for our hills -- they're mostly short and steep.