I think a combo of the above would work best. If you try to mod it too much to be better for the road then you'd change things that would hamper you off road, such as a lighter rigid fork for the road but then you compromise the off-road and end up with a bit of worst of both worlds.
As Elliot says with 26" wheels you're gearing is lower, add in MTB gears and you have even lower gearing. To try and find a best all-rounder when you want to ride on the road switch to fast 1" slicks as per the ones Grahame has, lock the front fork, remove the rack (unless the road ride is going shopping
). I'd also look at changing the big ring as per Dominic's suggestion to something with a few more teeth, That would help up the gearing a bit and wouldn't really penalise you off road that much as you often spend a lot of time in the middle ring but the bigger gear wouldn't be a problem for faster downhill sections.
That would all cost very little and you can just pop the rack on and off when you need it, a bit of a faff but would help reduce the weight, just make sure you put the screws in the holes after you've removed the rack to stop water and cack getting in the frame and damaging the threads. If you want to improve things more on the road then when you switch the tyres for on/off road use and have the wheels out then you could aso change the cassette for a more road spaced one although you could get a few chain issues with that, probably better to leave it as is and just have to have a wider spaced cassette on the road and less useable gears. 5 speed blocks never used to be a problem in the good old days so you can get along with less useable ratios just fine
.
Alternatively...switch it to a single speed MTB and then just switch the rear sprocket to a fixed for road use
. Cuts down on complications and weight in one fell swoop, or should that be one fell snoop.