With respect to valve and head work, you have to start with the premise that the intake ports and combustion chamber are so terrible in terms of performance that there is little that can really be done to fix it. The short side radius, the flat back wall, there is just nothing that can really fix the issues, including a lump. In fact, some basic porting work on the intake side can actually make the problem worse.
The intake ports are large enough to support a bigger motor so more than enough for a 261 motor. Enlarging them may help a high rpm motor but can only hurt a street motor or a motor designed to run at lower rpm. Kills the velocity. So if you want to tinker a bit, grind out any casting flash in the three intake ports, and smooth it out. Don't polish it, you want just a little roughness to help atomize the fuel, just get the heavy roughness (if any) knocked down. Same for the bowl area. Don't go crazy here, little smoothing, and don't make a cone out of the valve guide. It will not help the flow in this head and leaves the guide less than able to support the valve.
Same for the exhaust, grind out the casting flash, little smoothing.
On the valves, if you want to install a larger intake valve, you can use an intake (1 15/16) for a 50-52 power glide equipped 235. To make use of this valve, you have to hog out the bowls a little, and use a cartridge' roll to smooth out and blend the cut. GM used the larger valve in 1950 to help build a little more power because the newly introduced power glide used up some power.
On the exhaust side, if you want to use a larger valve, you can use a stainless one piece 1.5 exhaust valve for a small block chevy. I like Manley street flow valves for this. Same deal though as the intake. The larger valve will need some clearance on one side of the combustion chamber wall/pocket. So you will need to have the machinist massage the wall a bit. Then you have to hog out the bowl, and blend.
Milling the head and block, more than what is necessary to get a flat surface on each, I am not so sure I would do that. The stock 261 pistons sit further down the cylinder at TDC then a 235. So you are really trying to get to where a 235 would be, and then some. Now, lets say you mill the block .010 and the head .040, that is .050 combined. With that amount of milling you will likely have to sink the intake valves that amount, and then shim the rocker shafts the same amount, and then add lash caps to the exhaust valves or obtain valves with longer stems, just to keep the rocker arm geometry correct. I think the better call, albiet the more expensive call, is to bite the bullet and get some pistons ordered that are pretty close to being the same compression height as a 235 piston or even tighter, maybe 0 deck, maybe even with a lump to raise compression even more, maybe with a valve relief. Its a one and done thing. Then you don't have to sink the valves, shim the stands or use lash caps. Using custom pistons will get you the 9.0 CR you want and it makes a difference.
Then you can use a cam grind that is designed to take advantage of the 9.0 cr and low rpm torque (call Scheneider cams and they will sort out a grind). Another alternative for the cam is Tom Lowe at 12bolt.com. Tom has the specifications for Tom Langdon's Bulldog cam that Tom sold for a good number of years. Way way better then the stock 261 cam.
https://www.12bolt.com/store/p545/235_261_BullDog_solid_Camshaft.htmlJust some food for thought.
