Originally Posted by
cuda2k
Swapping out wheels is probably the best first step you can make.
Seems to be the general consensus, and I'd agree. If you can find an affordable set of 700c wheels it will also lower the top tube height a bit. But I agree that you can ride the bike as is, so 27" would be fine; let price be your guide.
[edit] on the backward peddling issue, you might also check the derailleur pulleys.