Which direction to go with build?

IMO;

Use what ya got, engine wise.
Use the 518 and install the 727's shift kit in it if possible. Sell 727 to recover costs.
I would not go the high compresion route for a E-85 fuel.
Leave the turbo for later, excellent idea though. But IDK if a grand will cover it all. For surley use a intercooler with the turbo.