I'm not familiar with the power output of the LT1, but a quick search shows the gear ratios in the 4L60E as:
3.06 1st, 1.63 2nd, 1.00 3rd, .070 4th.
The 3.07 rear axle is an economy or freeway gear, and behind something like an M22 4 speed with a 2.20 1st gear it would be a dog, since the launch ratio in low gear would be in the neighborhood of 6.75 (1st gear x rear axle ratio). By comparison, a 2.20 1st gear in front of a 4.11 rear axle (the old hot rod standard) results in a launch ratio of roughly 9.04.
Having the 3.07 rear axle behind a 3.06 low gear would provide an impressive launch ratio of 9.39 (superior to the 2.20x4.11 setup). Combined with a .070 overdrive in 4th, the 3.07 is going to drop into the 2's, which is Bonneville gearing, and should provide fantastic gas mileage, if the engine rpm runs in the torque band.
If the engine has enough torque to power this setup, I'd think it would be nearly ideal.
