What will I need to consider when modernizing a pre-1990s steel frame?
I think it depends on your frame, I have a 1973 Peugeot UO-8 which I replaced the 27inch wheels with 700 28CC and even replaced the handle bars with modern alu bars from MEC. The seat is now a Brooks and because the seat post tubes on french bikes are smaller I had to use a BMX chromoly post. My bottom bracket is a new square one from Velo-Orange instead of the cotter cranks of old. I decided to go with a flip flop hub but it would easily accomodate a 10 speed cassette. I installed modern TekTro brakes to replace the original Maffac whcih where truly appalling. And altthough I am sure there is a way to convert the down tub shifters,  you would be better off sticking with newer shifter at the same location. 

I upgraded and converted my steel frame becuase it is so rare that I find a bike that fits nicely and I really wanted a steel frame for commuting. You might just be going to the wrong LBS. I went to two awesome shops in MTL that where quite please to help out with this project bike. I do have to warn you that older parts for French bikes are not cheap. In total it cost me about $300 to convert the bike and I propbably spend another $200-300 a year on it in parts, tires, chains and BB (fixie is murder on the BB).

Good Luck and have fun with it.