I'd say go with your initial feeling. It sounds from your description that it's original enough that a restoration is merited. But on the other hand, its got a non-original engine so if you were originally leaning toward modifying it, go with it.
There is no "right" answer except the one YOU feel comfortable with. Everyone else's "..you HAVE to restore it" or "...it's nothing if its not a hotrod" opinions are meaningless since they're not paying the freight. That's my opinion; feel free to ignore it!
