It seem atleast to me that forks rated for 26" wheels have longer axle to crown length than the 700c forks. I know it doesn't seem to make sense considering the 700c wheel is larger in diameter. However comparing my road bike's fork with that of my mtb one, the latter does have a longer AtoC length.
Am I missing something or that in general 26" fork can accomodate 700c in terms of fitting? Brakes braze-on aside.

Skinny tire in 700, and a fat tire in 26 are close.

disc brakes compulsory , well hub(roller/drum) brakes too, but they are kinda heavy.

Some 26" replacement forks are "suspension-corrected", meaning their axle-to-crown length is longer, to mimic that of the OEM suspension fork. This is to ensure a bike frame designed around a suspension fork will fit the same, rather than sitting lower.
Also, even though the diameter of a 26" rim is less than that of a 700c, it's expected you'll use a much wider, and taller tire on that 26" rim. I have about 3 cm of space between the bare rim of my 700c wheel and the bottom of the fork crown, leaving just enough room of a 28mm tire. If I had only 3cm of space between a mtb rim and
the fork crown, I'd never be able to fit a normal mtb tire.

So can one use 700c rims on a 26" suspension corrected fork (brake requirements aside).

Yes, I've done it with a disc brake equipped bike some years back. I wanted a disc brake hybrid back before they started putting disc brakes on hybrids. So I measured up stuff and found that a 700c rim laced to a MTB disc hub and set up with a 25mm tire would still have lots of room for a fender on a mountain bike. And that was on a suspension fork with the bridge between the sliders. On a rigid disc compatible suspension corrected fork there would be lots of room for anything you could think of since there's no bridge.

Just to reinforce, the REAL reason the forks are longer is that suspension thing that vredstein mentioned. Some of the really old bikes from the days of all rigid forks would be a tight fit for a 700c. Or maybe not..... If you measure the axle to knobs radius of a 2.1 inch off road tire and the axle to tread face radius of a 700c with a 25mm tire the 700c is actually less than 1/2 an inch bigger. Given the need for mud clearance on the MTB forks it is actually likely that even the old pre-suspension corrected designs would work. Braking aside of course.

Hmm.... I was under the impression that disc and its mounting kit can be transferred from a disc equipped wheel (26") to that of a regular 700c wheel. Do I need a specific hub to accommodate disc mounting?

You sure do. There's nothing on a regular hub to attach the rotor to. There's two types of mainstream hubs that will accept disc rotors. The ISO flange hubs that use six M5 bolts and the Shimano specific "Centerloc" style rotor and hub that uses a spline and locking ring to hold the rotor onto the hub.

A lot of the 29er wheels and SOME narrow rim 700c wheels intended for disc cyclocross riding are coming with disc compatible MTB hubs. But regular road wheels don't and will not have a place to mount the rotors.

Most 26" wheels use high profile tires, so the dropout-crown distance needs to be long enough to provide clearance. Here's a 700C wheel in a mid-80s MTB fork designed for 26" x 1.75" tires:

John, that's an awfully funny looking bike frame that your fork is attached to....

Paul Components has a linear pull brake that will allow you to put a 700C or a 650B wheel in a mountain biKe fork. It isn't cheap however.

A cheaper solution is the Mavic Cailper Brake Adjuster. It's designed to fit the Speedcity 700c wheels to 26" MTB frame/fork. It raises the brake mount point to the correct location for the rim.

Can I transfer the disc flange from my 26" wheel hub over to the 700c wheel hub?

If by the disc flange you mean the actual rotor, as long as it is the type that is attached to the hub with six bolts, you can transfer it to any other hub that has the six bolt holes. If it is the Shimano Centerloc style rotor, you can attach it to any Shimano Centerloc hub.
Keep in mind that as the Park Tool site explains,
"The rotor diameter may vary between models and brands. Common rotor diameter sizes are 145mm, 152mm, 160mm, 185mm, and 203mm. The brake caliper, bike frame, and rotor diameter must be compatible."

No you can't. The flange or spline that the rotor disc mounts to is a solid part of the wheel hub. It isn't removable. Both the bolt on type brakes and the Shimano Centerloc style brakes need a special hub that has the place to mount the rotor. You should ride over to one or two of your local bike shops and study the hubs on disc brake mountain bikes. Then you'll see that these are special hubs and not just road hubs with a part mounted to them.