1) Someone please straighten me out, but I see no benefit whatsoever to converting to a threadless steerer tube system.
2) If it were my bike, I would start with the cheap upgrades, such as replacing the stem shifters with barcons and replacing the brake pads with KoolStops.
3) It is hard to tell from your digital photo, but to me the paint is good enough as-is, with a bit of clean-up and touch-up.
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"Far and away the best prize that life offers is the chance to work hard at work worth doing." --Theodore Roosevelt
Capo: 1959 Modell Campagnolo, S/N 40324; 1960 Sieger (2), S/N 42624, 42597
Carlton: 1962 Franco Suisse, S/N K7911
Peugeot: 1970 UO-8, S/N 0010468
Bianchi: 1982 Campione d'Italia, S/N 1.M9914
Schwinn: 1988 Project KOM-10, S/N F804069