Seems like a lot of money, effort, and hassle for what will end up being an underwhelming swap.
Not saying it to be condescending, but a 350 towing even 3k in a light K5 is a chore, and there is a lot of nickle and diming that will go with that sort of swap. In the end you will get next to nothing for the 350 because no one believes sellers anymore. Another thread just the other day where that was proven.
I wouldn't even consider it. Im not up on what machine shops are doing nowadays but I can't believe if you pulled it you couldn't get one to do the work on it for you.
Personal opinion of course, everyone is entitled to do what they like with their rig. I just don't think it's going to be as effective, cheap, satisfying, or easy as you may think.