I rode a cityfied mountain bike for a number of years, and recently replaced it with a Cannondale Bad Boy. The Bad Boy is more of a rigid mountain bike on road wheels & tires than it is a hybrid. Compared to what I had been riding, the Bad Boy is faster & easier, and also a better climber, much of which is due to its lighter wheels and stiffer frame. While a Bad Boy is available in a 13 inch frame, it's a little more spendy than you mentioned. Trek's SU100 and SU200 sit on 26 inch wheels rather than 700C, but are a similar frame style, and are available in 13 inch frames as well, and are in your desired price range. The Specialized Globe is a similar style.

Another style to consider is the fitness hybrid, which has a more athletic riding position than a conventional hybrid. Examples of this style would be the Trek FX series, Cannondale's Road Warrior, Kona's Dew, and Jamis's Coda. Trek and Cannondale do make their diamond frame bikes in 13 inch frames, while the Kona and Jamis bikes are a little bigger.