What effectively is the difference for the rider between 26" wheels and 700C wheels?
Getting below a certain size with 700c wheels, the geometry of the bike has to be compromized such that it does not handle as well as it could if it were designed around smaller wheels. In the extreme, it became quite obvious when we used to go to the Juniors races for our son and see the smaller kids whose parents chose 700c wheels for the greater tire selection, and it was like the kid was sitting way down
between the wheels and weaving like crazy, instead of sitting
over them and having good command of the bike. It clearly was very awkward. Head-tube angles were too flat because the feet had to be kept from hitting the front wheel in tight turns (even with shorter crankarms), stems were too short making for poor handling, and bars were usually much higher than the seat.
26" is considerably smaller than 700c. According to Sheldon's page
http://sheldonbrown.com/tire-sizing.html , 26x1 is a 650c, and has a slightly smaller bead diameter than 26x1-1/4 or 26x1-3/8.
Here's our son when he was 11 years old on a 47cm 19-pound road bike with 650c wheels, climbing Hawthorne Blvd in Palos Verdes, south of Los Angeles, about 35 miles from home. A few days later he rode his first century (actually 108 miles). Unfortunately I don't have a side view. (And yes, I know the jersey is too big.)