Liz, its admirable that your proactive in replacing entire camera system to find and work with something that fits your physical and artistic concerns. Many of us would not want or be afraid to go through the trouble.
I'm not familar at all with any of the Olympus gears, but I think the Xsi and a 50mm will serve you well. The Xsi is a small light body that packs a big punch when it comes to features and IQ. I also started with the Xti and loved that little camera, still have it.
I'm not sure about the 50mm1.8, it really is cheap and I'm not sure what your IQ is going to be with it. You might not have that same bokeh as your 1.4.
I just ordered the 50mm 1.4, and as a matter of fact is should be arriving in a few hours. Its going to be teamed with my 85mm 1.8 for portraiture works.
The 85mm 1.8 is very small and light, and excellent quality for portrait work. great bokeh as well with the 1.8 ap.
Hope it works out for you, but you would never know unless you tried, and trying you are.
All the best.