I think you should be commended for admitting that, not everyone would. That said, going through this middle step still does not seem like a great approach because any time you add more power, you will be going through the same relearning process. Give yourself the best opportunity to succeed and you will. You don't have to make the Gen III an absolute killer at first since in stock form it's already pretty good. The idea here is kinda like learning to play an instrument. It's always better to spend the coin on a decent piece because the cheap ones suck and make it hard to learn.
I'm in a similar boat actually. A couple years back I built a small block stroker that made 500 hp. Not bad, not earth shattering either. I broke it in on a dyno and made some pulls to see what it could do - 500hp was it. Even though it ran and sounded great and made decent power for what it was, I thought it should have made more and felt really disappointed afterwards. When I think back, I made some poor parts choices which I eventually realized was why it came a little up short. I don't think I had unrealistic expectations for it going in either but I was still feeling like I failed because it didn't hit the number I had in my head. Would it have been awesome anyway? Probably.
I had drag raced the car ('71 Duster) before with a different engine (it came with W2 headed 340) and it was a solid low 12 second car. The 340 was old and tired though and came out when I found a broken piston ring in #5. When I built the stroker engine I wanted to get the car in the low 11s and possibly crack the 10s if/when everything was optimized. pretty sure 500hp would have done that no problem but due to life circumstances, I never even drove it with the stroker combo and it ended up sitting for several years.
This last summer I finally got it on a stand and tore it apart hoping to prove it to myself I could 'make it better'. I spent a bunch of money on shiny new stuff and built it the way I probably should have the first time. So yeah, I spent a second significant chunk of money on a perfectly good engine that I never even drove. Funny thing is I might have a monster on my hands now. With the new combination it could very well go 10.30s.
Am I a little nervous about that? Yeah, definitely. Will I figure it out? Yeah, I'm going to have to. Making the car safe was a top priority to help me focus on driving instead of worrying about potential failures. Being unsure or uncertain is not an option, I have too much time, effort and money invested in the car and engine now not to follow through with it.
Hope that was useful.
