I think your hybrid conversion makes more sense. I don't know why someone just doesn't make a handlebar that allows hybrid shifters and brakes? The hybrid makes perfect sense since it allows you to run thicker tires, rear rack, fenders with very low gearing. I consider all of these quite desirable but the flat handlebar is just out of the question. Maybe the manufacturers think if they made a drop handlbar for the inexpensive hybrid, it would cut into road bike sales.
Regardless, I still want to see someone make a handlbar the breaks in two piece allowing you to slip on mountain bike brakes.