IIRC it is a 130mm rear spacing (correct me if I'm wrong). In that case you can run up to 10 speed on the back as it's exactly the same spacing as modern road bikes. Admittedly I would prefer more dish and a stronger wheel.
Respacing the frame to 135mm is definitely a good idea though, likewise fitting a freehub. Older 7 speed freehubs are around £10-15 and are a good start for a wheel rebuild.
this. the spacing for the rear wheels is pretty universal and hasn't changed much, i can comfortably fit a 9 speed back wheel in my 80's fisher as the dropout width is the same as all my other bikes.
just get one of the many 8 speed cassette rear wheels from the for sale section on here and put a 8 or 9 speed cassette on it. but dont forget you will have to change the shifters, chain and probably the rear mech.
1998 GT lts.1990 fisher montare/procaliber tribute.
1984 raleigh record sprint and the full set of Pacific Blue on dvd.