It really depends on how serious you are about competing. You can certainly get your feet wet with the 396 and see how much you like autocross. I'd at least put a quality pan on the engine. My car was pretty fast with the aluminum headed big block. Will the LS7 make you faster, of course. Less weight on the nose is always good. Enough to pony up 20k, that's hard to say without knowing how competitive you want to be. For 20k you can probably make more power anyway or make a little less for quite a bit less.
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Todd
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