I'd follow dano's advice and concentrate on other things first if it's a decent runner now. After fixing the oil leak, sounds like an easy fix, I'd do the rearend and springs first and drive it for a while, tuning to get it at it's best. With only 29k on it I'd leave it in the engine bay, leave the heads on it and upgrade the cam first. Heads are pricey no matter what you do. You can do the heads with the engine in the bay but it's a little more work considering header bolt access on the driver side but doable. I wouldn't touch the timing chain unless I were upgrading the cam, with such low mileage. Your buddy sounds pretty smart...lol. Good luck.
