As well as bad frame geometry, terrible bushings, welds, and the cheap, heavy materials used in a throw-away department store bike.
A few things I noticed... that freewheel will not work with those hubs in the new wheelset. Need a cassette type for those hubs. Also, the rear derailleur will have issues mounting with no dropout hanger on that frame. The cheaper derailleurs have the hanger attached to them and mount to the bolted on axle. The xt is designed to mount right to the frame, which this frame isnt made for. The new QR hubs would not likely hold it in place anyway. They will have a hard enough time keeping from moving in those dropouts alone, as they are meant for bolt on axles.
The welds are fine, if aluminum is heavy then I guess it is. I don't see any difference in this geometry than some of the expensive bikes.
The freewheel will be just fine with the hub.

The hub with the bolt holes is for the front disc brake mount.
You are correct. I will be making my own bracket for the XT derailleur. I have been known to machine a few of my own parts. Just a couple here and there.
I am trying to keep type of build under $500. That is my budget for this bike. I may go over with the FOX rear shock, but I have passed up several FOX floats on ebay for $70-80.
I try to help people who think you have to a ton of money to do this kind of stuff. I do my stuff with used parts, ebay and machine a lot of my own parts. I don't think what I am building will have any trouble keeping up with the guys I ride with.
You both are right, it isn't the best of the best. It is past year's products, and alot of it is used. 80% of this bike will be used parts. It isn't the most expensive bike. I don't really care about it being one. I want something that I can ride 5 miles to work everyday, and back home. Then have some fun on the occational weekend.