340 Is done for

well, I'd say keep it..Go .040 over, that's no big deal. Get a crank..either stroke it, or get a 318 forged crank. Replace the main bolts with studs, and have the mains fixed. My guess is the crank was flexing because of the mains moving, and they moved because it wasnt done well the first time, or it had detonation problems. Mopar lower ends are fairly strong for thier design, and the caps wouldnt walk unless they were given a reason....If you are planning a good performance rebuild anyways, those operations (minus the studs) would or should be a part of it anyway. At least this block, you know what you're starting with.
If not, I'll take that usless pile of junk off your hands too...lol.