I have converted several K-Line steamers, a 763 and the pre-war B6 and an MTH Hudson. But to directly answer your question, I just converted a Lionel FEF using a Lobaugh frame, USH drivers, and special cast side rods. Everything else, including the cylinder block, pilot, main rods, valve gear, are all original Lionel. It looks great! I have. 4-12-2, but it remains in the box - not sure I like the sand dome.
I removed and sold all the Legacy stuff - it took up way too much room, and I think a nice Tsunami sound system would be adequate.
Joe does great work, and that is an option. You could easily use the Lionel gears, motor, and electronics as above by running your 2-rail layout on AC.
It is not at all clear that you could make polarity standard. My MTH Hudson needed non- standard polarity due to some internal grounding I never spotted. It, of course, works on either AC or DC. If you convert MTH, be aware that MTH cylinders are seriously undersize. Now, if I could only get a "factory reset."
