318 with 340x heads sluggish

You can mill a lot off them. Past .100" - been there - done that. But - you can;t cut the intake flange more than about .040 before you get into the valve cover bolt holes. So if you cut that far you HAVE to cut the intake to fit too. Plus you need custom pushrods so factor that in too.
Personally - compression ain't that big of a deal on this build. Put in a cam that works and the rest will be fine.