I wouldn't worry about a drive train upgrade (as long as it wasn't a supercharged 600 horse power job)that is. Just replacing the original engine with a newer stock engine I don't think would cause any problems. Unless it was some far fetched swap, I most likely would not even mention it. Now if you were taking a bunch of parts from different years, makes, and models and creating a FRANKENSTEINMOBILE that would be cause for alarm. And I am almost certain that they would probably want it inspected for safety reasons. And they also would have a special rate just for you. Based on body parts, (like an arm and a leg) if get my drift.
It is very common and has been forever, to pull out the old worn power plant and put in a newer one.
Now I am speaking my opinion on liability issues only, if you are talking about full coverage(fire, theft, storm damage, etc) on a high dollar restore, I'm sure that is all whole new ball game. And they may require a professional appraisal. Good luck with that '35, and how about some pics.
