The subject bicycle is boom era (1971-1974), second from the bottom of the line, from a reputable Italian manufacturuer. The bottom of the line model featured Simplex Prestige derailleurs. It is arguable as to whether the Valentino or Prestige was a better derailleur system, as they both had problems and merits, however national pride made the Italians spec Simplex on their bottom of the line model. The Valentino was rarely found on non-Italian models.
As for Italian bicycles being spec'd with Japanese components during the boom, that is incorrect. Japanese components were found primarily on Japanese and North American models. Europeans tended to cling to domestic components on the basis on national pride and the belief that the their long association with cycling, particularly racing, would natually produce better components. Of course, this belief did not hold true with the North American population, which was largely ignorant of the history of cycling and the technical merits of the components. They bought the Japanese bicycles because they were better finished (smoother, shinier paint and no brazing blobs or gaps), thad wider gearing, stem shifters and brake safety levers. The last three criteria cannot be overemphasized. The typical US buyer had just outgrown his Stingray and was not used to the bent over position or strong enough to handle the narrow range European gearing. Only after the Japanese cornered the entry level market did the Europeans take notice and spec Japanese components, a trend which started taking place largely in the late 1970s.
As for worthwhile updates, I would agree that wheels with aluminum rims would be first on my list. Second, I would replace the front derailleur, but keep the original in case I decided to resell the bicycle. Saddles are very much a personal choice so you may want consider something else. Yes, I'd remove the kickstand but not the spoke protector plate, as in my experience the Valentino does not hold its settings well and one overshift is all you need to wish you had kept the protector.