I doubt there's clearance for wide 700cc wheels. My BBU's will take 26x2.1" knobbies no prob,but anything bigger than a 700x28 and the front tire will contact the HeadShok's air chuck. 38's def wouldn't clear the fork,and would prolly hit the bridges on the rear. The rigid BB's used to be 26",I doubt when they went to 700cc that the designers had 700x40's in mind. As for "inherent superiority" of 26's,they're not superior,they're more common. Go to your local shop and check out the wheel and tire selections. I bet they've got heavy duty 26" wheels and a ton of 26" knobbies,but prolly very few cross wheels and tires,and doubful they'll stock 29er kit. 26" wheels and tires are easier to find than wide 700's,and because of this are generally cheaper to boot.

The rim and disc brake BB's are identical except for the brakes. The rim brake models do have disc mounts and disc hubs. You might be able to adjust the V brakes down to take 26's,but I doubt it. Just ask the shop to put a 26" wheel on the front and see. If they can't,just go with discs. Some Googling and eBaying will get you a nice set of Avid BB7's for reasonable.