Opinions on a 340

With 8.5 and open chambers and a cam to make you smile? It will never happen. It will make maybe 5% hp more than your 318 and the bottom will be soft.
-I would ditch those slugs.
-Like was said; zero deck flat tops and closed chamber heads. That will get you closer to 10.5 c/r.Then you can cam it.That will get you close to or into the 400+ hp. And thats where the smiles start.
-If you have to stick with 8.5s, then Id put some 318 closed chamber heads on it with a 360 2bbl cam and a smallport dualplane intake and a TQ to top it off. You will be smiling for 6 days or 300 miles.Then park it for a week.Repeat. Every time you drive it after the resting, you will again smile. Ask me how I know.
-If you fail to park it for the resting week, then sooner or later the smiling will end,and you will be be wishing you had put the flat tops in it,and the closed chamber big port heads, and a real cam, because even though its making plenty of torque, its way soft on top.
-It would actually run pretty decent with your plan, including the current 318cam.It will probably be a mid 14 second car.Mid 14s made me smile when I was 16. Big time.Its addictive. I quit spending money at mid 12s. It gets expensive in a hurry from there.
-I wouldnt want to be in your shoes, making this decision.
-And, like Rusty said, 8.5 will work in a DD. Just be really careful with cam selection.
-Too small is better than too big.No lumpity-lumps at 8.5. Well, let me rephrase that; I would stay away from the lumpity lumps at 8.5. Id be trying to keep the Dynamic c/r up.

Happy Wrenching