He might of had 540HP, but generally I think the engine would of been much louder than normal with an aggressive cam and minimally restricted sidepipes.
Here is a tech article on a 12.5:1 607HP 306. The keys are always heads and cam. The heads need to flow into the 300s on the intake. If you dropped compression to 11:1 and retarded timing, you would be in the low to mid 500s.
http://www.totalengineairflow.com/te...dermonster.htm
If I was a betting man, and I am
I'd bet your EM buddy does not have 540hp.