I don't recall that any 720s were built with Italian thread. I suspect this was a repair from a bunged aftermarket BB installation.

What type of BB shell does it have? The earliest 720s used Cinelli (English thread) shells, later ones briefly had Cinelli shells with "TREK" cast into the bottom (where it usually has "Cinelli"), and finally they used Trek designed shells with cast-in under-the-BB cable guides from Signicast in Milwaukee.

But back to the issue at hand -- what type of brakes does the OP's bike have? The first run of 720s had Gran Compe centerpulls, which should have no problem accommodating to 700C wheels. Later ones had Gran Compe cantilevers, which might be a problem -- try it and see. Even later they had Shimano cantilevers which had a few millimeters of vertical adjustment that might allow 700C wheels.

I put MAFAC tandem cantilevers on my 720, and run 27" wheels. But 700C wheels seem to work, with a bit of goofy angling. Here's a 27" wheel:



And here's a 700C wheel in the same fork: