If you really want to keep costs down, then bore the block enough to clean it up, and look/wait for some NOS pistons and rings to show up on eBay. You can get some great deals that way. Conversely, you can figure out the minimum oversize you need, and buy pistons and rings at least that big or larger, and then bore to suit. Your machinist will want the pistons before they bore anyway I would think.
Also, depending on what you find when you take the engine apart, you might be able to just re-ring the engine, put some new bearing shells in, and not have to do any machine shop work.
If the engine runs now, has acceptable compression, and doesn't smoke much, then I wouldn't get too worked up about rebuilding it.
