You can take a 235 block .080". Just make sure the cooling system is in top condition, and the machinist checks for bore stagger. Because if the cylinders have been previously bored a little off from stock bore centerline, going .080" will be close to a water jacket.
A 235 block requires a sonic check of the cylinder walls if going to .125" to make sure you won't hit water.
If you're going to use a M4F cam and keep the RPMs below 4,000, you could get better throttle response with a smaller carb. The Holley 390 I had on my 235 worked really well. Make sure you have the bottom end balanced, as the 235 only has 4 main bearings. Balancing helps the bearings live longer.
As for power, let me flesh out your setup. It sounds much like the one I'm doing now, except I'm at .060".
All the stuff you mentioned, plus:
"mini" HEI distributor
898 high-compression head shaved .030" with mild porting/blending
engine balanced
aluminum timing set
M4F cam degreed in
clifford dual-coil valvesprings
New rocker assembly
You might average anywhere from 12 to 17 MPG with that setup and easy driving.
The street HP potential of a 235 has been argued much here over the last few months. We agreed that a well prepped "hot" 235 is good for 175-200 HP at about 4750 RPM and 225-250 lb-ft of torque at about 2500 RPM. But most guys here would advise against revving a 235 past 3500 RPM if you want it to live.
hope this helps
chip
