I am not sure how good the dropouts will be for a single speed. I have seen a few horizontal drop outs on MTB's of that period and they often have an extra bit of metal between the opening and the back of the dropout which limits how much you can move them. It may be fine on this one but if you really want to go single speed, you should check the dropouts.

Overall, I would love to have that bike if it was bigger and for sale locally.