the main problem you might run into with that bike, is anything involving the bottom bracket. Cottered cranks are indicators of a lower end bike and I have seen a few fail. unless you are just going to use it as a frame and replace the bottom bracket (if thats possible, depends on threading and availability of parts), I would look for a Schwinn or something Japanese like a nishiki. and yes, aside from adjusting the brakes, taking off all the excess junk, and perfecting the chain line, all you need is a wheel set, which may or may not be cheaper than rebuilding one for you. Wheel sets usually go for $180 shipped.
if you find a bike frame for next to nothing, you can convert for about $300 and some change, assuming no new crank is installed and no new anything else that goes with it.
You seem like a perfect candidate for a bikesdirect bike or even better, at least an IRO while they are on sale
if you want to start from scratch though and convert,
http://philadelphia.craigslist.org/bik/443805711.html