Look around on craigslist, e-bay and/or local junk yards for a complete drop-out engine & trans that includes all accessories & harness. It's difficult to say what a good deal is. There seems to be quite a few people on here having a hard time finding decent deals now. Seems like everyone wants an LSx in their car now. I got mine for $2k off e-bay, but that was two years ago. Anyways, I chose the LS1 route because everything I needed was there. If you go with a truck engine, you will need accessories, oil pan, intake, etc. which can add up pretty quick. I'm not sure how much it would offset the cost of the cheap truck engine.
As far as making power, it's pretty easy with these engines. The factory cams were quite whimpy. So just adding a mild cam would be all you would need to do to meet your power goal. I used this cam in my engine http://www.summitracing.com/parts/CCA-54-426-11/
. I found a magazine write-up with this cam in an LS1 with no other mods and it made 460hp. You could probably use this cam http://www.summitracing.com/parts/CCA-54-412-11/
and still meet your power goals and not have to modify the computer & still get good gas mileage. You didn't mention what your budget is going to be. Just keep in mind that these swaps can get pretty pricey.
I saw that iron LS block in Summit's latest catalog too. I would avoid building an engine unless you have a nice fat budget. Just do your homework thoroughly and you should be fine.