I'll just add upgrading wheels is the one thing you can do that really changes the nature of a bike.
When my old Grand Prix was new in '76 with steel rims, it was what it was.
Two years later when I began the rebuilds and swapped the wheels for Zeus/Rigida it made it a completely different bike.
The real difference between alloy rims and steel is inertia - resistance to acceleration. Climbing counts as acceleration because by definition any climbing is accelerating against gravity - swapping to alloy rims makes a bike come alive.
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Adding that the same inertia applies to braking - resistance to deceleration.
There are two things going against you in braking with steel rims - inertia is one, the other is the friction against the brake pads is terrible, and goes to nothing when they're wet.
There's definitely nothing wrong with 26-inch wheels. You can buy good tires for them, and they will continue to make new bikes for them, one recent example, Handsome XOXO
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A third option is in between 26" and 700C, and that's 650B - currently a very strong resurgence in this wheel size, and there are some exceptional fast tires up 42mm available.