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My question: is this an intelligent road to be going down, or should I just bank the cash and buy a new bike and consider the Fuji a lesson in misguided frugality?
I'd consider it somewhat misguided. You could spend a fortune trying to fix it up and in the end you'll have a 30 year old low/midrange bike. Looked at as a learning experience/fun thing to do, it could be worth it. That thing has a lot of old stuff there on it. A lot of new commonly available stuff isn't going to fit and while you'll probably be able to find parts for it, it could be a real PITA. Learn to love the Sheldon Brown site.