Am i crazy or am i on to something here?

I agree with the above comments that say, check the leak-down, plugs, and it sounds like valve seals. If the worst You need is gaskets, a valve-job(stock), and maybe a
T-chain kit(stock), I'd run it. Otherwise, there is a lot of value in that particular 340, do the research and check it out......then make the call. While the magnum is a nice
swap, it's not going to be more economical than an LA, and there will be lots of little "extras" that need done(time), that's a consideration.