Thanks for the advise.
Just want to give you an update of my compatibility tests and my WiFi status.
Finally the Linksys RE1000 arrived past Friday, Initially I just changed my DIR 827 from Wireless G to Wireless B G and N. At this moment the DWL-G700AP was still on the second floor and connected. on my first flooor I used RE1000 CD wizard, the installation was very straight and easy, but at this point the RE1000 was loosing the connection to DIR 827 very often. even that the RE1000 was very close (30cm)
RE1000 has a status page where you can check the status of the link and how long it has being connected. So by checking that the link lasted at most 1 minute and then again the RE1000 was reconnecting.
When it's reconnecting the WiFi coverage provided dissapears for about 20 or 30 seconds (the time it takes to reconnect).
So I started to check Linksys forums and noticed this was a common issue

the solutions they provided included setting a static IP, changing the MTU of the router to 1400, chaning the channel width to 20 Mhz, and doing a manual configuration of the WiFi instead of letting the wizard to do this for you. On the manual settings you can specify the type on WiFi encryption and override the WPS.
So I did that, tried combination of this, even tried to change my DIR 827 again to Wirless G, but the issue was still the same.
So my first impression was that the RE1000 was a crap!
BUT later I remember that the DWL-G700AP was still working on the second floor. So I went upstair and diconnected it.
After that I went back downstairs and decided to again let the RE1000 Wizard guide me. Now the results were better, a lot better compared to the connection not lasting more than 30 seconds, It lasted about 2 hours and then I decided to go to sleep and let the RE1000 on. I was hopping in the morning to see that the RE has not reconnected, nut that was not the case, now the uplink uptime was in 13 minutes.
By checking the RE1000 log I noticed that it constantly pings the gateway, and when no response is given then it reconnects again.
The log has some events like that, not being able to connect to 192.168.0.1
Later I decided to do another factory reset to the DIR 827 and leave anything untouched, just changed the LAN, WAN and Wireless settings, that was all that I modified.
Even the 5Ghz channel was on.
Now I do a factory reset to the RE1000 and again used the suppplied CD.
And now it seems more stable, it has being 34 minutes of uplink uptime (while I was writing this message). Oh and now I've placed the RE1000 at the second floor.
I'll keep up checking and hope that the RE1000 never has to reconnect or at least give me an uplink uptime of several hours.
Now I've removed the DWL-G700AP.
Will comments when additional info appears.
Finally I have a question FurryNutz:
Does D-LINK has any access point or repeater with Dual Band but that supports repeating or extending at the same time the 2.4GHz and 5GHz? the models you mention and according to the secs, none of them offer extending the two channels AT the same time?