Hi jags!
First off, don't try to think whilst battling the 'flu; it just won't work. The bugs get in one's head and make things cloudy.
'Sure hope you feel better soonest!
Second, as you've sussed, the Raleigh just isn't designed for a touring load, and the handling degarades sharply when one tries.
I have some tried-and-true solutions that might help in part, but they'll mean some compromise on your part...
• Do what you can to minimize both mass and bulk. The most direct solution to this -- apart from just taking less -- is to have as much as possible do double-duty.
That pillow? Well, it might have to either go or be replaced by something else, say the empty dry sack stuffed with some spare clothing come nightfall. I did the clothes-in-stuffsack thing for decades before succumbing to the urge for a pillow. Loved that thing, but it upset the applecart with its bulk and weight, so I compromised, going instead with an inflatable pillow that was extremely light and covered in just a wisp if nylon over some thin synthetic fill. I got the Coccoon HyperLite air pillow. Only 2.4oz/68g and it is *tiny* when stuffed. See:
http://www.rei.com/product/799192/cocoon-hyperlite-pillowD'ya really need the tea kettle if you've already got a pot? Just boil the water in the pot first, then heat the stew or soup and you're as well off with half the gear.
I am at the point where I can do ultralight touring-on-the-fly with my SOL kit only -- tent, footprint, pad, sub-kilo down bag, air pillow and silk liner, and my Pocket Kitchen with 21g beer-can-and-penny pressurized meths stove for a total just at ~4kg At a spare longsleeve wool jersey, tights, microfleece balaclava, windjacket, and rain gear, and some dehydrated meals and the bags to carry it all (they always weigh something apart from the contents) and I'm pretty well set at ~7.5-8kg depending on how much food and fuel I carry and there's room in that for my little MP3 player, a paperback book, or my AM/FM/Weather radio for entertainment, perhaps my LED headlight for camp use (inverted over a translucent bidon, it makes a dandy area light for no extra weight or bulk). Do I have all the little touring "luxuries" I'm used to? No, but I'll be riding and sleeping warm and dry in 2.5-3 seasons, and I'll be eating hot food and tea in camp. Not a bad tradeoff for what started as an emergency kit and has become my ultralight ""touring" kit on those days when a really long day ride becomes just too long, or if I decide on the fly to stay late exploring things at the far end. No more worries about spending the night our unprepared or getting cold/wet/hypothermic/hungry.
Ultralight touring needn't leave you feeling miserable; it can be done, but it does require some adjustment. I know I could go much lighter, but not without some serious investment, and I can do this using stuff I already own. I'm figuring on using this lot a single night at a time, but really there's no reason why it couldn't be used very nicely for longer trips as well. After all, they're just single nights strung out a bit longer.
By the way, everything above fits in my rack-top pack, atop my rear rack, in my handlebar bag, and in my rear jersey pockets with room to spare and I always have the option to haul as much as 6.5l of water on the bike itself. If you don't need that much capacity, remember: A water bottle with screw-off top adds storage space as well. I have some containers that are dedicated to this purpose, but a genuine bidon will do as well provided you can undo the top and it has a wide mouth.
• Do what you can to more evenly distribute the weight on the bike. Your present setup places a lot of weight high and at the rear...and not so solidly mounted. Your frame is a little small for some solutions that would work better for larger frames with more clearance above the tires, but there's still a lot can be done. The saddlebag is basically good; it puts the weight near where you sit and the bike is happy carrying it there, but you can't get by with the saddlebag alone. The present setup on your light frame is a bit like the tail wagging the dog. Why not distribute it about the frame in the manner of bikepackers? There's photos of some really creative rackless, pannierless setups here:
http://www.bikepacking.net/category/individual_setups/• Consider
wearing a bit of the weight, either in your jersey pockets or on a low-riding hip pack. I've done this (reluctantly) on some bikes and was amazed at what I could sometimes carry. A fuel bottle, your MP3 player and phone, the usual tool kit, a wind jacket -- all will easily fit in the usual three rear jersey pockets. For years, I commuted wearing a small backpack and after five years of it, vowed I would never ride with something on my sweaty back again. The hip/waist/belt/fanny pack is a bit different in that it rides low and leaves one's back free.
• I don't think a trailer -- Extrawheel or otherwise -- will work in your case, Anto. The chainstays and seatstays on your lovely lightweight bike are similarly thin and flexible and I don't think you'll get great handling with a trailer because of this. If the bike were just a bit more robust, then I think it would be a viable option, but -- Man! -- the same things that make your Raleigh such a fantastic ride work against it in this case.
Just some quick thoughts on ways you might still be able to tour with your present setup.
All the best,
Dan.