Upgrading stock 1971 318 heads

Given the choice of factory 71 heads or later 302 castings, I would use the 302's. The cost to rebuild is the same. The smaller chamber of the 302's will provide a compression boost. An .040 deck cut on the heads would absolutely require a cut in the intake face and most likely shorter pushrods as well.

As for what your final compression would be, that is largely dependent on where it is now. How far below deck are your current pistons? To answer the "will it run on pump gas" question, we'd need to know what cam you plan to run. There is a thin head gasket which might be of use.

Yes, larger valves can be fitted, but the machining cost would go up. OEM replacement 360 valves cost about the same as 318 valves, but to gain anything, the bowls would need a 70 degree cut and a little blend with a grinder. In either case I would be skeptical of a pair of $300 heads. To do a decent job, that's about what the parts alone will cost (16 valves, 16 guides, 8 exhaust seats and springs). Basic machine work will be about that much as well. $500 for a quality rebuild on a pair of heads using OEM replacement parts is closer to reality, if not getting off bit light.