360 heads on a 318, I know it has been beat to death...

I think your machinist is right on price wise. I have yet to get a good set of heads for under $600..And that's using stock parts. Most of my sets of iorn heads take $800 to get what I consider good. That's all new guides, unleaded seats plus intake seats if needed, Stainless swirl polished over size valves, new name brand springs, cutting down the guides for higher lift, new locks, retainers, teflon or viton seals, and a 5 angle Serdi valve job. These heads will run much better than factory, and last for 100K miles. That's rebuilt to me. Your choice of head, IMO, is ok. I think you could do better in terms of not needing milling of stuff. Basically, the thinking is better port needs less cam, and a smaller port can live witha bigger cam. The cam is ok the way it is, but it would be better torque wise in a 318 sized intake port. You already have the 360 castings, so that keeps costs where they are now. I do think you should mill them if you choose to use them, and dont go 2.02 intakes..keep the 1.88 intake valves. Mill them .040 on the deck surface, and the intake surface, and run them. You will want to pay close attention to the lifter preload when it's being assembled...You may need shims under the rocker shafts to set it at the .030-.040 most guys run. Or shorter pushrods..dont buy them until last. Tha last set of heads I had done for my 360 were '70 318 small open chambers. All done, they cost me $800, and I ported them myself, so that was free..sort of.