Welcome aboard, I'm going to move this to a different section since, he he he, you just jumped right into the fray with 2 feet and no lookin.
But to answer your question........
You do have a good bit of work infront of you. My suggestions are;
For now, use the 318 and 904. A big block will fit in there. And Shumahcer (sp) creative services (
http://www.engine-swaps.com/ ) makes swapping engines easy. But the cost of it all is just more money that right now, you don't have alot of, it can wait for better days.
Work with what you have now, go big block later.
Work on the body, engine compartment first since it is empty, and get it ready for paint. Cheap paint doesn't mean a poor job or finish. Lay down several coats and top it off with several clear coats and just keep on buffing.
Performance wise, the 318 can make a nice scoot. Basic add on's and a cam will get you into the 13's without getting into the rebuilding of the engine. Just comploment the engines power with a stall converter, in which you can get a inexpensive lock up converter from MoPar/Mancini racing, scroll to the bottom of the page. (
http://chucker54.stores.yahoo.net/mopper41.html) with a basic shift kit for the lock up tranny.
And a set of gears for the rear and some S/S springs.
While theres nothing like a big block for motorvation, the conversion kit plus the big block and tranny needed for it, (Big blocks need there own tranny, the small block tranny will not bolt up) and then driveshaft shortening, upgraded rear, etc.... well, it adds up quick. By the time you get half way through, you could have been rolling with the small block.
Snoop around here in the for sale section of used intakes and such for the 318 on the cheap.