One of the issues with steel rims is that they won't handle the pressures of some modern tires, so your tire choices will be limited.
That bike looks like a mid 70's model, and would have certainly had 27" wheels. The rear caliper is usually where you run into trouble converting to 700C, many Japanese frames seem to have the brake bridge set super high for some reason. I ran into a problem with a bike I was given a few years ago, someone had taken a bottom of the line Panasonic that had 27" wheels and mounted up a set of modern 700C aero wheels from the 1990's. The front worked out fine, the original Dia Compe 610 caliper was just fine, but even a long reach center pull wouldn't reach the rim. What they did was to run an old mountain bike caliper in the rear with oversized pads to make up the clearance issues.
The right answer is to use a drop bolt for the rear caliper. It lowers the mounting point of the caliper so you can use the original set of brakes.