I agree. Use the seasoned block. You could have the block decked to increase compression and overbore the cylinders. Have the block hot tanked to clean everything up. If you build it right, you can get 300+ horsepower out of it.
I'd try to use modern pistons and rods, rather than using the heavy stovebolt slugs. I don't know the standard bore size of a 235 and can't seem to find info on it anywhere either. But you may find that with some wierd overbore like 0.035" or whatever, you can use small block Chevy pistons. Then play with your rod length to get the right compression height, using modern rods. Once again, I don't know the crank journal size at the connecting rods, so you'll have to work with a machinist. But turning down a crank, or welding it up to a larger size and turning it down, is not expensive and is commonly done to restore cranks. You could probably get the journal size to work with a modern forged connecting rod.
Lots of modern cams are available for these motors, and they take standard hydraulic lifters. And you can get a great flowing aluminum head now.
I'd suggest picking up last month's issue of Hot Rod (I think it was) or checking it out at the library. They had a series on modernizing the Chevy I6 for V8-level power. Although it wasn't a 235 they featured, I don't see why you couldn't modernize a 235 as well.
Cliffords might have stuff to bring your 235 into modern technology. From the outside, you could look almost stock, except for induction and exhaust. Internally, you could be shifting at 6000 rpm and running like a scalded ape.
