. . .I do mostly local driving with a occasional highway drive. . .
I'd say this is the key factor.
A good 216 should be fine. The T5 (even with a 3.55 rear) should be good at both low-end and high-end.
What are the forward gear ratios on your T5?That 1960 235 is a good one - it has the high compression head and the 261 camshaft. It is significantly stronger than the 216. Keep it on-hand. You will have to install one of Pre '68 Dave's water pump relocator (no big deal).
Either way (rebuilt 216 or 235), you will be OK.
