I agree to keep it simple. A 5.3 would be a cool engine and should be relatively low cost to get. Keep it on a budget that the AVERAGE guy can build. Don't cut up the body, floor pan, etc to make stuff fit. See just how good you can get it to handle with the stock frame using available aftermarket add-on's like A-arms, spindles, etc (like several have suggested). I'm not sure that I agree on a $25000 budget. I bet you could build a nice ride out of that car for less than $20,000 if you shop right, buy used when possible, etc.
Just my .02 cents...
GeoffP
68 Camaro LT1/T-56 4.11 (soon to have the FIRST set of 12.19 Wilwood 6 piston brakes)
87 Camaro IROC-Z LT1/4L60E 3.23