360 w/J heads-need help deciding
So I have been warned. Nothing a set of thicker head gaskets can't handle though.
Why mill something to gain compression and lose it with thick gaskets? Replace head iron with gaskets?
If you have the heads at the machine shop, have them shave .025" from the intake side and be done with it. You'll have to step away from the cork front and rear intake gaskets and either go with high temp RTV or foam if you go that way.
It sounds to me like the engine is in good order, but the combination of upper half and cam with a stock bottom end is going to level torque and power until it hits 3500.
I think it's a good buy for the money and it's not the first time I've seen someone try to recover immediate costs to sink money into a different idea. Case in point, I bought three of the classic cars I own for less than $750 each.
If the bores in the engine measured under .007" taper and honed nice, I would be very tempted to get a set of custom pistons to wake that engine up, before crushing gaskets. That would be another few dollars well spent on that engine, to the potential interest.
It's not often you get to look at the inside of an engine before buying something second hand, that is also complete enough to install.
Seems like a pretty transparent and honest deal to me.