i wouldn't pay $40 for that thing... more like 20, but its your money.

yes it will take 700c wheels
yes you will have to buy different brake levers
yes that seatpost should take a new saddle, provided the old saddle is rails (can't say without looking under it, but it seems to be)
yes the stem can probably be swapped out easily, provided it is indeed 1" and not the weird smaller size.