Will 302 heads work with an Air-Gap?

I think you'll find the 262 too mild for all the other parts. I had a similar combo to yours and went with a 268 duration cam, wished I'd gone one notch up (wilder) on the cam. My motor pulled hard from idle to 6K, and I used an old school Torker and 600 Holley DP. Either way, you'll be happy with your 318, there fun little motors!