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The Magnum really is the best cake and eat it too option as far as factory stuff goes.
After you get the engine buttoned up, you could find an A500 OD trans and install. It's a 904 based trans and I don't think it requires any/as much tunnel mods to fit. The rear crossmember will still need mods to fit. If you intend to beat on it a lot then you should go with the 518 trans. It's 727 based and I think the OD section is a little broader across the shoulders and may need at the very least a BFH to clearance the tunnel.
Now you put a set of 3.55's or 3.73's in the back and it will get rolling much easier and still cruise at a nice RPM. Both are good for economy, win win.
Kevin
Agreed with all of that except about the OD, the A500 and A518 both use the same OD section, so the A500 fits better simply because the trans in front of it is smaller, so the OD moves closer to the engine where the tunnel is larger. A benefit of the A500 is it would have a 2.74/1.54 gearing for 1st-2nd (like the A999), whereas the A518 has 2.45/1.45 (same as a 727). But if you keep the 2.76 gears, the OD is not much benefit (engine would lug too much). And this is outside your project scope anyway.
For your engine, though, a little change of direction increase in scope is probably worthwhile IMHO, so:
Agreed, the 5.2 Magnum is a winner for your goals. Will add 50+ hp easily (5.2 are usually 220-230 net vs 230 gross of a 1970 which is probably not far off from the 150hp net that started in 72) + better MPG vs a standard 318. A magnum will give hp and efficiency due to roller cam, significantly better heads, and a few other minor improvements. There are some things to consider to installing one of them though, relating to front cover-WP housing, fuel pump, intake manifold/AC compressor and belt drive. If you dig around on Dippy.org I did a few good write-ups some years ago (IIRC I am Fury Fan there also). Lots of good MAggie info on that site.
I agree with the references to the -302 heads of the late 80s, but those aren't easy to find anymore. MAggies are everywhere in JY. You might even be able to find nice low-mileage one that needs only an inspection and new gaskets. EFI engines last so much longer as there is less fuel washing into the oil. If you find a candidate, give it an oil pressure test, CR test, and pull the VCs to look for sludge. If it looks good, I'd 'clean 'er up' and run it.
I've heard numerous references that the 5.9s (and 360s also) are kinda gas hogs, so don't be tempted there. Plus the 5.9 and 360 are both externally-balanced (and they are different!), so there are some extra parts needed there, whereas the 5.2 is more of a bolt-in.
I major thing to watch - if using a Maggie and the factory EFI, you need to make a nice rounded slot in your trans housing near the pass-side cyl head, there is a sensor that mounts to the block to read the tone wheel on the flexplate (so you need that flexplate too).
I kinda think in your case a 5.2 with a 500 cfm Eddy (get an elec choke so it has the 'economy calibration') or maybe a new 650 cfm Street Demon (a reincarnation of a Thermoquad) would be an easier choice.