I think that you'll be happy with the D70. I've heard of people making 20"x30" prints with no problem, so I think that 16x20 would be fine too, just remember that you'll have to do a bit of cropping to get the proportions right. The D70 has a pretty quick autofocus, and I doubt anyone could really find any appreciable difference between it and the 20D. The Canon does have a slightly faster continuous mode, but for portraits, I don't think that matters much.

As far as the LCD goes, the D70 and 20D both have 1.8", but the D70's has a slightly higher resolution.

I wouldn't worry too much about RAW conversion. There are several free tools that you can use. A good one that I've tinkered with a little bit is Picasa, which you can find on Google. It's not Photoshop, but hey, it's free.

The whole dust problem is overrated. Usually, if you have dust, it's only visible in shots taken above about f/10, and even when you can see it, it's so easy to remove. It takes two seconds with the clone tool. The moire issue is overrated too...I don't know if I've ever seen it in one of my photos, and if you read some of the D70 boards, you'll find the same there too.

Don't think that I'm just trying to plug the D70. If you'd have gotten a 20D, I'd say stick with that. They're both amazing cameras. Just rest assured that the camera you have will do what you need.