Very cool project, always good to see a late 2nd gen getting built.
My dad and I are building a 79 with much the same goals, less emphasis on street manners, though. Like nearly everyone else, I would turn the BBC for some cash and go either LS or small block. We're going with an aluminum headed 377, and will be moving to a LQ4 after we find the breaking point with it.
A lot of progress can be made on a tight budget with the stock subframe, the suspension forum at
www.nastyz28.com is a great resource for info.
I've got tons of pictures and all the specs for our build at
http://www.acmeautopartsonline.com/camaro. Can't wait to see the progress on yours, and it tearing up some German meat!