318 build problems & new direction

I wouldn't get to caught up in light weight revability. A well built 440 revs quite well and those pistons are insanely heavy. But yes if you can lighten up a bit all the better.

As for the 394 hp I'd think you would need a little more. The recipe I've come understand for a 400 hp small block is 10:1 CR, 750 airgap, xe285hl or similar and 220 ish cfm heads.
With a little more head you probably can get away with xe275hl.