Don't forget about proper or desired gearing. As I've recently proven with my new O.D., being able to split gears on an sm420 or sm465 and staying in a good powerband will do more for you for towing than mildly hopping up your motor ever will. A warmed up motor would just be icing on the cake! The real problem will be trying to do any of the above for less than 1k. OldSub is right, with this much of a price restriction, a big block swap from a donor with the rest of the parts is your best option. And a gamble as well. And then, to be safe, you'll need to make sure your brakes and suspension are adequate which of course means more money.
