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yeah i have 'zenith' hubs. they are the same as formula and system ex hubs, i.e. made in the same factory. they are great. not as good as top end kit (phil, profile, goldtec etc.) but that's beyond your budget. the best thing is that they have replaceable cartridge bearings, which sounds boring but will mean you won't have to chuck out your hubs and rebuild your wheels when the bearings die. which does happen.
120mm rear spacing will almost definitely fit in your 126mm spaced drop-outs. it makes sense to stick with standard dims, good call. give peter a call at outspoken cycles in cambridge (www.outspokencycles.co.uk), he's a total hero and will listen to you and sort you with a good deal. he might be able to put a zenith hub on a decent mavic rim for you for that price. good service, fast, friendly and cheap.
good luck!
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more common than not, yes.