In order: yes, and nuffink but not having a TFT display available. There is no electrical reason not to do so. If you have a spare TFT display (lucky you), replace the FSTN display forthwith, or sooner.

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Then all you will need is a 603e/100MHz, 117Mhz or faster daughter card for total satisfaction (as long as you also have a 32MB RAM expansion card).

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I actually plan on keeping it stock 68k, but I wonder if I can upgrade the processor with one from a 540. If possible, I would LOVE to turn this into a Powerbook 540, but I don't know if that means that I would have to replace the motherboard.

Also, was there a full '040 for the PowerBook, or is it dang near impossible to find?

I just thought, if I am going to have a 68k powerbook, I want it to remain 68k. That was the whole reason I got it.

I know all about the Surface mount, but that's not an option, I just want a full '40 if possible.

Looking around eBay, It's damn near impossible to find CPU upgrades. All I see is RAM and PSUs for it.