302 heads

Yes, .040 is a good bit to cut so there's a good chance the intake will need milled also. You won't need the bigger valves either.

You should google or look around here to get some head tech info. I think it's pretty commonly accepted that a closed chamber 273/318 head with stock valves and mild porting (there is a sticky here on it that I followed for mine) will support a decent bit of power. I don't think you'll need larger valves on a 318 until you start to really push it over 300 (say you're shooting for 400 HP), which is probably going to take a larger cam than the xe268 we were talking about, which is going to need more stall and gear and compression..at which point you might be better off with the KB pistons and open chamber heads that already have larger valves and flow better. That's also the point where I'd be inclined to build a 360 instead, more power with the same money and less effort, and more street friendly.

Also, if you go with the 920 heads, they're not prone to cracking AFAIK like the 302 plus they're not smog heads. They are closed chamber, very close in volume to the 302, enough to where it shouldn't make a difference in compression I believe.

Specs:
2658920 273/318 1966-67 1.78 1.50