Just some food for thought, having lived your dream now through 3 trucks needing engine work... My first was the '39 with the seized 216. So I had that completely rebuilt (babbit and all) that ran about $4,000 by the time I stopped writing cheques. And that was back in '92. Not sure what that would have been in today dollars. At the time, the old timers who did it told me upfront that being a babbit pounder added $1,000 to the rebuild. Anyway, it was a beautiful engine and ran perfectly. But it was still a babbit pounding 216 that absolutely screamed like it was about to come apart at anything over 45 MPH.
Next up was a '49 (my second frame off resto). I removed the 235 that was in it and had it rebuilt very professionally. This was about 10-15 years ago. Again, the completed price tag was over the $4k mark. Again, a beautifully running engine.
Current truck (the '49 1-ton) had a nice running 216 in it (low-mileage truck that came from a family friend). But .... still a babbit pounding 216. The truck was not suitable for any driving beyond the county line. This time, I skipped the 235 route and went straight to the 261. Not sure what I have in that one, but it was a group effort (led by Hotrod lincoln!) anyway and we made a get-together, workshop and tech tip out of the whole thing (check out "Rebuilding the 261" in our Tech Tips section). I was able to use most of the peripherals from the 216. And I got the kit from Jim Carter to use the 216 valve cover. I was lucky to get a '54 261, so the water pump/fan is in the right location, so no adapter plates, radiator relocation or any modifications required to slip the 261 in there. Meaning that today, when you look in my engine bay, only a Stovebolt Geek would be able to tell that it isn't the original 216 staring back at you. But yet I can cruise in traffic and do 60-65 on the highway all day long with a useful load in the bed. And my truck has the 9-foot bed, too
What I learned from all of this:
1. Originality or Driveability -- pick one
2. If you go with driveability, do not waste time, money or effort on a 216. Cubic inches are your friends and the more, the merrier. To keep close to original, stick with a straight six like a 235 or 261. A GMC 302 would be the nuts, but there is some work to do in fitting it into a non-GMC of an earlier vintage like yours. But still ...
3. Think of any unknown (to you personally) engine as a rebuildable core only, nothing more. Hotrod Lincoln taught me that and it is absolutely true. You will hear anecdotes from people who stumbled across freebies that ran perfectly ... for awhile. Most of those stories don't include the year or two later post script... I was once given a "Recently rebuilt, low mileage engine" that I happily installed as was and it ran great ... for awhile. Until an expert listened to it once (um, that would be ... Hotrod Lincoln!) and said, "You have to pull that engine and rebuild it" so we did and sure enough, the people who rebuilt it neglected to address scoring in the crankshaft journals or the piston that was missing a chunk ... Who knows when that engine would have failed catastrophically? So sure, you can run an engine as you find it, but you are betting against the house and you know how *that* goes ...
4. If you are going for an upgrade, go all in. Rebuild whatever you get and go big early because if you don't, you'll wish you had later. A 261 is a good choice for max power in the most form/fit replacement package. A 235 is second. Rebuilding your original 216 is a great option if you want to maintain originality -- but you might still want to talk to Hotrod LIncoln off line as he is cooking up a plan for rebuilding 216's to be as powerful as a 261 (or better). If you go this route, you might be able to retain originality while gaining driveability. But affordability may go out the window -- be prepared to load up the dollar gun and flip the selector switch to full auto.
Hope any of this helps ... or even makes sense.