Mountain bike derailleurs work under more abusive conditions than a road derailleur, that is why they are more expensive. XTR is deep into the gram consciousness (as was previously posted), so it is not appropriate here.
Touching up the back end of this bike is likely to snowball. The conversion could lead to 9 speed cassette, mountain derailleur, and new shifters as well. Brifters (those integrated brake/shifters) are really expensive. Going to separate brake levers and barcon shifters would probably be cheaper, and it would let you use those auxillary brake levers that Cane Creek makes.
I put them on my Waterford and I don't know how I ever made it through life without them.
There was some discussion about this bike on another thread. I still think the bike should be ridden under load to see if its owner has the leg strength to ride the bike as is.
I have had mixed results replacing the granny gear on cranks with a smaller one. For me, I don't think they shift that well. I previously suggested leaving the back end of the bike alone and putting a mountain crank up front. It would be great for touring, but probably limited for regular riding. There are no easy or cheap changes here.
Should livinday2day02 want to go the 9 speed brifter route, I have a pair of used, 9 speed Tiagra brifters in my parts bin. I relubed them last summer before I put them in the bin, so they should be in good shape. Contact me off list if you are interested at firstname.lastname@example.org.