Engine size recommendation

I'd just run the 318. Yes, the 360 will make a little more hp/torque, but a well built 318 should have no problem making 300 hp and still get 18 mpg or more. Get the compression up around 9.5:1, put 1.88/1.60 valves in the heads, run a 600 cfm carb, Edelbrock performer intake and a set of headers with dual exhaust to make it sound good. Go with a fairly mild cam, I like the Lunati 60402. Sounds good but still very manageable.

My Challenger has a rebuilt 318 in it, built before I bought the car so I don't know the specs. Its a pretty mild build though, runs fine on 87 octane, idles really smooth, I doubt the compression is even 9:1 or that the cam is anything more than a step above stock. I run a Edelbrock streetmaster intake, 600 cfm Carter, and Hooker Super Comp headers into glass packs and 3.23 gears. It sounds good and pulls pretty well considering the weight of the car. Its not a tire shredder, but its no slouch either. And even though I know the headers are too big and it runs a touch rich I still usually get 15-17mpg on the freeway.