Personally I'd build up the Miyata. I enjoy building and converting the bikes myself rather than just buying a sweet ride from the go. But thats just me. Its also a great opportunity but don't go flip flop, no one flips thier flop, it tends to be a waste of money.

As far as going 700c yeah it'll work, but you can still find 27's nowadays so there no real reason to, but once again, that's just my opinion.