worrying about engine weight should be your last concern. i think that 50lb difference between the small blocks is hogwash. and that 200ish or so for an A8 when you break down for $ per pound is a poor investment in weight reduction. your return for dollars spent in lightening something up would be so, so much more on a fiberglass front clip, gutting the interior, lightweight wheels/brakes, aftermarket K setup, manual steering, alum radiator, that sort of thing.
TT5 had the answer-- lose 50lb someplace else.
unless you have or are planning on getting a car that is "correct" for that 340 and you care about "numbers" then i wouldn't even consider it as an option and sell the thing to finance another aspect of the build.
also, "8K for an A8" is not even close to being a reality. that's just for the block man. then, before you can even thing about putting stuff into that block you're gonna need sleeves (i don't think the block comes with them) so there's another 1K, a timing cover (1,300), headstuds (1,100), misc. block hardware/cam bearings, waterpump drives, plates and **** (1,000), dry sump oiling system (2K WAG) so that's about 15K before we're talking about machine work, heads, intake, and a bottom end (cranks are what, 5K?)...
random question, what's your overall budget for this build? what do you project the timeline to be?