As you say there are a lot of different ideas for retrofits. Those are nice machines, but from what I have heard the control system sucks. Part of how you approach this depends on your budget. Your options range from using the existing steppers and drives, to a full blown installation with new AC servos. Realistically you probably want something in between. The good news is that I see a stack of manuals sitting on the knee, that may be helpful. There are existing parts in the electrical cabinet and the operator panel that can be reused in the retrofit.
I would take a hard look at ClearPath motors. 750 Watt, NEMA 34 would be a good choice. Mach3/4 would be a good control software. There are other options also. Before you get too far into this, you need to decide what you want to spend on this project. That will pretty much dictate how you approach it.