Does it exhibit the same symptoms in third or fourth gear?

I've noticed that the short BB to rear axle distance causes the chain to run at alarming angles on the highest and lowest gears, to the point where the chain rubs against the bash ring in the highest gear.

I just finished converting my bike to drop bars as well and intend to post a report over the weekend. I'll just say for now that if I were to do it again, I would definitely do it differently.

Knowing what I know now, the easiest drop bar set up is to use:

*) Drop bars of your choice (of course)
*) Drop levers for V-brakes (like the Tektros mentioned)
*) Ratcheting bar end shifter (like the ones from Rivendell) - or try your luck with old bar ends in friction mode. These should allow you to use the existing derailleur.