Cylinder Head decision

If I were in your shoes and short on funds I would look for a decent running 5.2 (or 5.9)Magnum and not mess with the 318 unless you want to rebuild it after you verify the short block is tired.

Still, you wiped a cam lobe, you concern should be metal in the engine. Have you addressed that?
This. A 360'd probably be more than the heads, but a 318 should be right around that range. Larger roller cam, 1.6 rockers, likely compression's the same- but the valvetrain should be in better shape on the newer motor. Can't use thermostatic choke on a Magnum but even smog-compliant there are some options with electric chokes. (at the least- a JY Quadrajunk from an '85-'88 truck/van or Thermobog from an '84-down truck/van)

By his statements and timing it sounds like the old cam wiped and the K6900 replaced it. Dunno for sure though- and dumping the oil's obviously a must and short change intervals would likely be a good idea shortly thereafter.