With any car, engine transplants can be performed. The S10 always had a kit available for a V8 conversion.
The 3.5 is probably a V6 or something. Maybe it's a 3.4 liter, the same V6 in Grand Am GT's. If so, that's a pretty good engine. It has some midrange and top-end grunt. The original S10 was never a roadburner with the 4.3 liter V6 either, but it was a remarkably competent "billy goat" off-road, with a wonderful 4WD chassis.
I think it might be easier to supercharge the V6 than to install a V8. If I were doing the conversion, I'd be tempted to use the Grand Prix' supercharged 3.8 liter with a smaller pulley.
