I'd do a freshen up on the motor, either just re-ring and bearing, since the 86 is a forged piston motor or go to 306 but if you're going to 306 might as well go 331 for a few hundred more since you're boring it out anyways. Put a nice set of twisted wedge or afr 165/185 heads and performer rpm or twisted wedge intake on it. Around a 510-520 lift cam. A centerforce dual friction type clutch, pro 5.0 shifter, fms driveshaft. Shorty headers and X-pipe with your choice of mufflers. Frame ties. Put 3.73 to 4.10 gears. Do a 5 lug swap with 31 spline axles with a limited slip diff. poly bushing upper and lowers. a decent rate spring all the way around. then you would need a tune, injectors and i'd put a bigger radiator in. you should run 11's (depending on which heads and gear you choose) on a drag radial and drive where ever you want. the t-5 with the pro 5.0 and that block will hold that hp and set up for a long time. issues happen when you add power adders, like a 225 shot and split the block in half to run 10.20's on heads that only flow 170 cfm on the intake side...lol i ran base performer heads with a f cam and 1.7 roller rockers on a stock block 347 for years with a victor jr intake and 650 carb hooked to a t-5 for years. that combo on a radial in a stock suspension 84 vert went 11.82 with 4.10 gears and burnt up radials. then in a 89 coupe with 4.30 gears and a slick its gone 11.42