27x1-1/4 is almost the exact same size as a 700x32, so any rack that works with touring or road bikes should fit just fine, as long as you have the drillings and braze-ons for it on your dropouts and frame.
I've got a Topeak explorer (or something like that) rack on my commuter that's treating me great so far. It on;y cost about $35, too. My Arkel panniers (the bug and the utilitybasket, respectively) clip onto it just fine. The only downside is that the glossy black finish scrapes off of it quite easily when you start hooking panniers onto it, leaving bare aluminum shining back at you. Fortunately, the nice lightweight aluminum doesn't rust or anything, so this shouldn't be too much of a problem other than aesthetics.
Jim's got them in stock down at the Hiawatha Cyclery, where I got mine.