FWIIW, my grandfather joined the Victorian Engineers (Submarine Mining) in 1890 or thereabouts, was a foundation member of the Australian Corps of Signals just after Federation, kilted up for the Vic Scottish, was commissioned in the 52nd Bn and retired in 1923, but what the H... has that to do with this discussion?
I just want to place a couple of facts about the B707 in RAAF service into the argument. Firstly, when acquired, the initial aircraft had a very low cycle to hours relationship - about half if memory serves. Unfortunately, despite repeated attempts by the operators to enlighten the hierarchy, RAAF (Malcolm Fraser?) refused to consider a simulator as part of the program. Further, the then hierarchy from time to time refused to pay for travel to overseas simulators. So, circuit bashing became the norm. In very short order, the cycles count caught up with the hours, in the face of Boeing recommendations. This unfortunate situation was exacerbated by the "cheapest is best" decision to buy the Israeli wing tips. The simulator indecision was reversed by the absolutely unnecessary Sale event, but still took a couple of years to install. Result - the airframes were b-ggered. Replacing the centre section wing carry-through frames (cracking) would probably have cost a fortune, even if possible. The total hours are not the issue. Cycle numbers are.
So far as "upgrading" to KC135R, what is BR71 (I'm about the same age!) on about? The fundamental "upgrade' would be fitment of boom capability - and I'm writing with the advice of someone near and dear to me who spent a couple of years with USAF on just that model, refuelling Blackbirds and other interesting airplanes. We looked at booms when I was writing staff papers about tankers in the 70s. To retrofit a boom to a used 707 requires a rebuild of the back half of the airframe - and expert advice is that in the absence of the original jigs it would be hugely difficult and expensive to mate a brand new rear to an old front due to the in-service twisting and accommodations that all airframes go through.
The interesting aspect to all this is that had the hierarchy listened to the operators and brought a sim on line with the aircraft 25+ years ago, it might have been possible to re-engine and upgrade to modern glass with zoom zoom defensive kits and keep the old girls going for a while. But who listens to the operators?
I would also like to point out to Scran: "The B707 refuellers were NEVER an operational capability (despite us deploying them to support ops in Afghanistan)" that not only were they operational out of Kyrgyzstan, but also out of Kuwait (although the latter service was sadly never recognised as operational (warlike) due to some unfortunate politicking by SASR whom I otherwise admire). I suggest you ask Angus whether they were operational!
May I suggest that the next war is the one we should be equipping for. I spent half a lifetime (adult) working with the relics of the previous one or two wars. The one time I fell on my feet was to fly the 'Bou when it was brand new - and a new capability for RAAF and Army. I didn't believe in '64 that it would last ten years. God knows I was wrong then! But I don't think I'm wrong in saying that the best advice we can take is from those operators who served in the front line last week. Go figure.
Edited to add that I never figured out why RAAF refused to consider the USAF offer of 2nd hand KC135s during the 70s.