I have a 1986 Pontiac trans am that I would like to beef up. My goals are 400rwhp with good gas mileage. My question is, would the cast iron be better to achieve this goal or would the aluminum be best? Also some advice on how to achieve this would be greatly appreciated.

 

The block material makes no difference in power production. It will slow down the car a bit carrying around an extra 100 pounds of iron block. There might be differences of compression ratio between various engines (in stock form).

The real power is in the cam, heads, intake. My opinion is the "smart" money is on iron block and use the cash difference you would have spent on the aluminum block to buy better cam and heads. The "extra smart" money is on a 6.0L engine. 5.3L is transportation.... but a 6.0L will run.

 

If you have a choice between the two and they are similarly priced, stick with the L33. It is a better motor in terms of the stock parts in it. (better heads, intake, compression ratio, etc). However, like Qwk mentioned the power is not in the material but rather the parts selection. 400rwhp is a very doable goal and can be done with a 5.3, but easier with something larger. It all comes down to your budget. Like any LS swap, power level is dictated by budget.

 

Bottom end of the l33 is significantly stronger (google gen 3 vs gen iv rods) than the lm7 plus better cam, heads, and compression. Weight off the nose helps with mpg too.
With shifty on this one. If they're the same price and condition l33 all day but the l33 is generally more expensive.