The frame doesn't look all that rigid. But it's hardly a problem. Otherwise it's close to the time to start to figure out what to do to the frame. Hardtail - probably not but the tail looks bit weird so something needs to be done. Maybe I'll try to dry fit the engine and gas tank and maybe saddle to help envisioning what it could become.
Wrote the text above the pic couple of days ago and now I'm adding this. The more I spend time staring at the frame and looking bike pics on the internet, the more convinced I become that it has to be turned into a hard tail. I wasn't especially for it for couple of reasons, one small being that have so nice looking vintage pair if suspension to go with it. But there is no denying that it'll probably just look so much better as hard tail. There seems to be no obvious way of having suspension there that would look as nice as I'd like to. But I'll reserve a right to change my mind as many times as I want to; especially if I can come up with an installation that would both work and look awesome.