Turk:
I would build as many cubic inches as possible. The larger, the more streetable. If you are not dead set on using a cast iron block, I would use an aluminum block from Shelby (maybe he will give you a dicount seeing that you are now in good standings) and build a 526. This is a 4.440 bore with a 4.250 stroke.
I assume you know about Dove Performance. If not, call them and ask for a catalouge. They specialize in FE parts. They make two diffent heads and two different intakes for TP's. (440) 236-5139. They will even build you a 604 cu. in. SOHC using brand new parts for about $40,000.
I would stay with pump gas (10.5 - 11.0 to 1 comp.). Race gas motors run hot, are hard to get gas for, and not worth the extra 50HP or so.
With a solid roller, and the correct person doing the porting, I believe 700 HP is very doable, maybe 750 HP. I see two problems though. It will stick throught the hood (no biggie) and you will need somebody to make some exhaust with 2.25 inch primary tubes. Not going to be cheap, my guess would be $20,000.
I know you have an engine buider, but you might want to talk to the person that built my engine. He is in Central CA. Made 585 HP at 6,000 rpm with a solid lifter (non roller) cam, Edelbrock heads, 10.8 comp. (pump gas) and an Edelbrock dual plane intake. He has built quite a few FE's and understands porting and camshafts very well. He speced. the cam himself (didn't use one out of a book). Most builders don't understand things that well. He held a Super Stock record in NHRA for over two years with one of his engines. He is now building Pro-Stock engines for a gentleman named Ben Watson. He just started doing this last year and actually qualified for one race with a driver that never drove a Pro-Stock car before in his life. He is usually within .05 seconds from qualifying. This is the most competitive form of motorsports in the world. A 16 car feild will qualify within .08 sec. from 1st. to 16th. There is only a 25 HP diff. from top to bottom.
E-mail me if you are interested.