goin' V8
From the been there done that in small block V-8 engines, it would be IMO that a 360 with it's extra stroke and larger bore has only 2 draw backs.
1. Externally balanced. If you do not have a tranny to go with the 360, a B&M, TCI or other flex plate is needed. It's a cheap adapter flex plate that allows a netral balanced converter to be used on a external balanced engine.
In example, a 273, 318, 340 converter to a 360 without issue.
('73 - 340 converter exempt, 1 year weird external balance engine not compatable with a 360 external balance.)
2. Mileage is down by a very small amount. 2 -3 hwy mpg.
The extra torque of the engine is something you should shoot for, not consider.
I had my old 360 getting 20 mpg's in my Dodge Magnum that weighed in @ 3700+ lbs.
Mild mods from the stock 2bbl. configuration were;
a '73 - 340 air cleaner with a K&N filter
Iron 4bbl intake with a Carter 625 carb
Truck distibutor triggering a MSD. (MSD is a excellent mileage enhancer)
Dual exhaust off the manifolds @ 2-1/4 inch w/ a "H" pipe
The rear gear was a 2.76 with 235/60/15's (26 inch) on all 4 corners.
What are the differences between a 78, and an 87 318?
moparlee is right. Also correct on a roller cammed engine. Spec'd @ 240/240 - .391/.391, this Hyd. roller is lame for the tail pipe passing the test. However, you have everything else so the expense is just for a cam and maybe springs to match. A good idea.
You can get a cam from Crane, Comp or many other places. A mild one would improve everything on the engine. To big and mileage drops off. Use caution.
The '78, 318 has or should have slightly lower compresion and cruddy heads.
The 302 series head should be on the '85 - '87 engine and would be choice in head selection. Also with it's smaller chamber and better design, it should show nice power improvments with mild cams and compresion increases.
(Via piston or head mill)
For the choice between 318's, go for the '85 roller 302 headed engine.
What I described above in the bolt on's to my 360 should be done to your 318 if you so decided to get and use it. You the trick/bolt ons above for a gain everywhere without penelty. (SP!) The engine should respond well without mileage loss (Actually you should gain) and increase in power.