Thanks very much for everyone's thorough input and suggestions so far.
Ok here's my plan as of now: First I'm going to clean the lenses with a Meguiars headlight restoration kit, check the ground wires on the battery terminal and then adjust the height of the lights, as I wonder if they are aimed too low. See where that gets me.
If that doesn't do the trick I am seriously considering the Retro Solutions HID kit that Raidernation mentioned. Looking around the net it looks like they do have a good reputation for high quality kits. The cheaper off-road bulb solution seems like a bit of a hack and I also didn't like the fact that the bulbs look like they only last around 200 hours. That's way too short. Don't want to keep replacing them every few months, and it looks like the Retro solutions kits are only about $170 or so, which actually seems cheap to me to convert the car to HID lights. Heck I think the Sylvania ultra bulbs were around $40 alone. With regards to the legality issues, I'm guessing it won't really be a problem if you use a quality kit that is installed and aimed properly, unless maybe a cop is having a bad day and targets you for some reason.
Questions about a Retro Solutions kit:
1.) Someone mentioned before you should not put HID's in stock reflectors? Is that true and if so how does their kit work around this?
2.) On their 55w Digital kit I was looking at, it stated at the bottom: "Recommended: -Relayed wiring harness is recommended for use in vehicle applications where otherwise not included." Not sure what that means but do I need one?? I did select the vehicle "2000-2007 Ford Focus" which added $22 to the price, so I am not sure if it includes it, if needed?
3.) Which bulb fitment do I select? is it "9007/HB5 bixenon low/high beam"??
4.) How difficult is the install and how long does it take? Are their step by step instructions with pictures somewhere?
5.) Any other additional parts or special tools needed?
6.) And this is very important: Do you have a lot people flashing you with this 55w kit installed in your 07 Focus because they think you have your high beams on? We live on Long island and there is a LOT of traffic. We would be pissing 100's of people off every time we drove it at night or in the rain, and we definitely don't want that. Would we be better off with just the 35w kit? Or is it all a matter of if they are aimed properly it's not an issue?
7.) Do you need to get the fog lights too, or can I just get the headlamps?