Nothing new to say, but I'll say it in different words. Every crankset has a minimum sized chainring it can take because of the size of it's spider arms and the diameter of it's bolt circle (the bolts that hold the chainrings to the arms). You need to find out the brand/model of crankset and it's bolt circle diameter. Then you can find out what the smallest chainring it can take is (probably 39). A compact double is made to take smaller rings (probably 34) than a standard double. Your Waterford may come with a 42 inner, and if so you could go down to 39 for minimal expense. Increasing the cassette size very much will most likely require a new rear derailleur (looks like a short cage in the pic), but going to a compact crankset probably will also.
Oil is good, grease is better.
2007 Peter Mooney w/S&S couplers/Terry Butterfly
1993 Bridgestone MB-3/Avocet O2 Air 40W
1980 Columbus Frame with 1970 Campy parts
1954 Raleigh 3-speed/Brooks B72