I converted a 1984 Trek 500 to from 27" to 650 a few years ago. Was able to fit 650 x 38 tires, I don't think I would have had clearance for anything larger. I believe that was also a 126mm hub and I had no problem sliding a 130mm hub in there. There was just enough reach on the brakes with the Tektro long reach brakes. No issue with the bottom bracket difference. I liked that setup a lot. Sold it to my brother though. Looks like the vintage-trek.com site is down, hope its temporary. If I ever doe another 650b conversion I'll look for a similar trek bike.
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