Nick,
Just my 2 cents.... I have a 468BB with merlin heads, a big solid roller cam, 10.5 to 1 compression, 850 carb, and free flowing exhaust. It is a fairly mild build, but extremely fun and tons of torque.
I am actually considering a more mild hydraulic cam and fast EZ EFI for better gas mileage because I make a 70 mile round trip to work every once in awhile. I put a six speed behind it after trying to drive it on the freeway for more than 2 minutes.
Sounds like you have a good budget to start with, just need to figure out how much you will be driving the car. I sometimes wish I had gone the LS route, but that quickly goes away when I hit the gas and break traction at 45mph
One thing is for sure, whichever engine you decide on make sure to back it with a six speed
