You would probably need a Canadian "Pontiac" 261 block to use hydraulic lifters. I don't believe the American truck engines had the oil gallery drilled for oil supply to the lifters, since all the trucks ran solid lifter cams. No, you CANNOT run hydraulics on a solid can. The lobe profile is all wrong, and cannot be compensated for by adjustment.
Yes, it is possible to mill a 261 head for more compression. Get ready to spend at least 3 times the money you would on an 848 head job to correct the piston to valve clearance and valve train geometry problems that doing that creates. The compression gain is minimal either way.
I'll be doing a 261 engine assembly job over at Stovebolt headquarters with about half a dozen observers/helpers next weekend. Fun times! We're using a new stock-specification 261 cam made by Elgin, and I'll be doing a timing, lift, and degree check like we did on the NASCAR engines during the installation. After that, I'll have the measurements to prove why hydraulic lifters on a solid lifter shaft is a really bad idea- - - -something the rest of the world other than self-appointed stovebolt gurus has known for the past 60 years!
Jerry
