Hey Mark, I can completely empathize with you. I have been in your position many times and it is tough to deal with. It is even harder if your boss doesn’t have a true understanding of what he is asking of you (which it sounds like he doesn’t).
This is a perfect opportunity for you to move up in the world. You shouldn’t look at it as a negative, or with principle. Your boss has turned to you because he knows he has a issue to address and as a long time employee (eight years is a long time) he sees you as the solution. Great!
If it were me I would put together a proposal (project outline) that recommends the best direction to go with the website and the work that is involved to get there. Then sit down with him and express how you agree with him that it is a smart business decision to concentrate on the web-based side of things, this is what you recommend based on all of your experience and this is the work involved. Then I would offer to do it as a freelance project outside of work hours for a set price and explain how he would be saving money compared to if he went to a professional development company. Also that this way it wouldn’t interfere with the daily tasks that you already handle.
This will accomplish several things. First it will show your boss that you are concerned about the company and have taken a vested interest. Second it will give him a realistic view at the amount of work that is involved to achieve certain goals as well as allow him to pick and choose from your recommendations. So if he has a budget he could do it in phases or not do certain things all together. Third it will provide you with the opportunity to become the manager of the companies web-based responsibilities, you get extra compensation that he can deduct from taxes (thats the way it works in the US) and everybody knows what the expectations are because your proposal will be detailed. (check your private messages, I sent you a proposal for reference)
If your boss still wants you to do it on the clock then at least he will have an understanding of the amount time involved and he may get it done around 2010!! I would also recommend to him that he gets some quotes from some professional firms so he really understands the value of the project.
I am sure it will all work out, they obviously didn’t hire you as a web developer.