Finally the decision has been made.

Sounds like a good plan. I think the only thing I would do differently is put in the stall converter while the engine is out and access is better. I wouldn't want to split it back apart just to get it done if you know now that you are going that direction. But that said, if it's not in the budget now, then down the road it will have to be. Other than that I say the 360 is the way to go.
I was actually thinking about that myself but as of now I cant afford a new converter. Maybe if I just happen across a good deal on one!?!
But for now its not in the budget. The machinist said it would be after Christmas before he could start on it so that gives me more time to save up.