I always thought that a 318 was a detuned 340 with a smaller bore or a 340 is a hopped up 318 whatever..... Give a 318 the same specs as a 340, ( cam, heads, intake and carb, exhaust) and you are right there.
So, i would kick it up a notch from there and put a good top end that can breathe as well as headers, 10:1 compression, balance and blueprint, and a good cam like the 268 comp cams would be great for an engine like this. Use all high quality parts and gaskets. Also good machine work is a must with any build. You won't regret it. Don't go crazt with the overbore, good straight cylinders will give you more dividends in the long run than a few more cubes. A sonic check of the walls will dictate this. I think you could get 400 hp out of this combo easily, and if you had extra coin, go with the stroker crank and the roller cam and get at least 50 more h.p.
If you want it quiet, why not use imperial mufflers and a 2 1/2" exhaust?
It still will flow pretty good and will be quiet.
318's are good sleeper engines if you do them up right.
JMHO,
Tom.
This is all with a usually free engine core!