Is the engine it's original block?
If so I would restore it, 318's can get some awesome hp (400hp plus) enough?
Pretty Cheap to do as well.
You could (depending on your $$$) buy a new Block for it, crate or scan eBay, a 440 would be an awesome engine, or a 340, 360 or 383 would be just as nice.
Depends what you want it for?
Show - stay 318 or custom 440 (clone)
Street - 440/383/340/360 In other words drop a different engine in.
Cruise - 318 or Small block 340 would be great and they aint slow if you want to go.
Sounds like it's going to be a hot looking car