Mitch,
You said you have an Israeli convert to 7.62 NATO? Well, that is somewhat different. With that said, I would take it out to the range, and just cycle, not fire, about 200 rounds through it. If it is totally reliable on the feed and ejection, then this weighs heavily in favor of the .260, which is built on the .308 Winchester case (externally, identical dimensions to the 7.62 Nato). You would just need a new barrel.
On the other hand, these Israeli convert rifles were made by Israel under stressfull circumstances with a shoe string budget. So, it is possible that it won't reliably feed the .308. And if not, then you are back to square one in the analysis. In such case, again, I would recommend the Swede.
P.S.- I just got through reading a lengthy set of posts where a person bought a K-98 in 8mm, and then when through a very lengthy and obviously expensive sporterization, including a new 26 inch stainless barrel, plus stock, plus trigger, plus reworking the bolt handle. He left it in 8mm. I would imagine that his total costs were in the neighborhood of $800 to $1,000?
In the end, he has a very very nice looking rifle, which shoots .84 inch groups with handloads. This is very impressive, but it is only .26 inches tighter shooting than the beautiful Interarms Mark X Mauser that I had, shooting .308 Winchester factory ammo, that I only paid $375 for in excellent used condition. So really, in doing these things, you've got to stop yourself, take a deep breath, and ask yourself whether all of this is really worth it.
Regards,
Mannyrock