Internal halyards will clank inside your mast at night instead of outside
Actually, I've never had anything but external, so I can't comment intelligently on the pros and cons. Running internal halyards would be a somewhat bigger project. Do note that if your other mast hardware is attached with sheet metal or self-tapping screws, there are sharp points inside the mast that can snag or chafe halyards. Machine screws or rivets are much preferred, but you might want to consider that if you don't want to also tackle reattaching spreader mounts, lights, blocks, cleats, or anything else attached to your mast.
Re: halyards-to-cockpit hardware. I used Spinlock T38s. A couple pictures at
Sailing and restoring #9874. They're simple and well made and (somewhat) cheaper than the CD price For 1/4" halyards, you could probably use T25s; if you want 5/16", I think you'd want the 38s (which also work nicely with my 1/4" lines).
You probably do have to replace the masthead sheaves; CD's price seems excessive, but I didn't find another source for sheaves of the right dimensions when I did mine (perhaps someone else will chime in on that).
You might already have some blocks you can use at the mast base; if not, you can often find sale prices or random blocks on eBay. And decide what sort of lines you want - the advantage to the wire-to-rope system is that the wire is really low stretch (and when the sails are raised, nearly all the halyard is wire. So when you replace them, you might want to consider low-stretch line. You'll find lots of opinions on line choices in the SBO archives. I used 5/32" dyneema (for stretch), covered with the cover from Sta-Set (same as the furling line I described at
Sailing and restoring #9874). We've been very happy with that system, but you have to like doing a little splicing.
Stainless hardware (from boltdepot.com or McMaster-carr) and Bed-it butyl tape should complete your kit. Overall, you might not beat CD's price by a lot by assembling your own kit, but you can get better parts for a comparable price.