Tap and die set. Suggestions?

Wise. No-decent one will have tapered nose and straight body-all you need. Thread conversion as you describe is not possible-it will be a bugger's muddle of a bodge. You might be able to get away with it, but not a proper job by a long way. Plug is a thing you screw in to block up the hole.

When buying taps you should normally by them in 3's:

taper - for starting (its a smaller diameter than the others)
plug - is a slightly larger OD and starts forming the threads properly
finishing / bottoming chases the threads to the bottom of the hole and forms the proper, dimensionally correct thread.

Metric taps are not interchangeable with imperial.
http://www.benchnotes.com/Thread%20Cutting/thread_cutting.htm