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The drillings are there more as rack/guard mounts and are unlikely to line up with all but wacky specialist calipers; this frame is designed for stud-mounted brakes.
Path of least resistance for 650B would be something like Paul Motolite brakes (£££), or vintage Tektro equivalents (rare), with sliding pad mounts that can be raised enough.
Also consider that the chain stay clearance on this particular frame is quite tight.
If you decide to go with 700C/650B, you’ll have to get creative with the brakes as the studs on your frame are positioned for 26” rims.