Hello Again.... New Project.. needs a heartbeat ASAP

Well the crew cab project is on Hiatus but I have a new smaller project.

I picked up a '97 Mexico Spec Tahoe 2dr 2wd with a bad TBI motor... compression is bad and failed wet test, drinking oil like gasoline! Yes it is a plain old school TBI/non vortec motor.

So i'm looking for some input, I have 3 options as i see it..

EASY; swap in another swirl port motor, found local for $300 and have no power..

LESS EASY; swap in L31 motor GMPP intake found local for $450 then add in cam/springs/high flow Holley TB, re-seal/complete gasket kit, tune/chip etc and have about $1200 into a maybe 350HP motor

LESS EASY; 5.3 swap, Schoenfled headers, use my spare 6.0/LS1 cam, ecu/tune all for around the same $1200 as i know of a couple 5.3's locally for $500 and could get that same 350HP...

anyone have any GEN III builds of this type?

heres the tahoe...
http://i168.photobucket.com/albums/u...ahoe/tahoe.jpg

Also a lil more info on tahoe.. I have already swaped to twin electric fans from a taurus. Has a new 34" radiator, Swapping in a 14bolt SF axle thats set up with a 3.73 G-80 diff. ^ lug and rear disc swap. I have a lifetime warantee fuel pump from my 98 silverado i could use to get the fuel pressure needed and swap fuel tanks as i believe the current tank is the older style for TBI sending unit. The truck does have the typical 97 interior and am using a Denali cluster. I plan a 6 lug swap up front as well with new c-2500 rotors. A lowered stance will come in spring with either air suspension or a 4/6 or 5/7 drop..