Was this a good running engine? It doesnt look too bad. My own version of "cheapest" should run about $1500-$2000. If the bores are good, meaning no rust pits or bad scratches, and the engine was running before so you know it's not cracked. It's very easy to spend a lot to get everything perfect. It's sometimes better to leave "well enough" alone. I dont like installing new bearings on a used journal. Your horsepower is very reasonable, and can be reached safely with nothing more than factory machining and a cam change. So my build would be a crank kit (crank and mains and rod bearings), file-to-fit moly rings, cam bearings and block hardware, and the usual oil pump/pickup, good timing set, cam, lifters, nad I'd replace the rockers with MP thicker stampings, but I'd clean and reuse the pistons and rods as is. For machining, clean the block, deck it, and have it honed for the right finish with moly rings (that's much smoother than a typical ball or flex hone). Spend the money on having the heads completely redone. Guides, seats if needed, valves, the works. Add good springs, have the guides trimmed for teflon seals, and give it a good set of valves. Dont worry about adding compression any more than using MP thin head gaskets. Stick a Comp Cams XE268, and I'll bet you can go pretty well beyond the 350hp level, and more importantly, you'll have great torque and it will run on 87 octane. That's how I'd do it.
