If memory serves: in Kalifornia, if you replace an engine with a different engine, the law requires you to conform to the more stringent requirements between the vehicle and the powerplant. E.g., if you put a new Vortec pick-up engine in an 85 Blazer, you will be held accountable to conform with the Vortec requirements. If you put an 85 Blazer engine in a 77 Blazer, you would have to conform with the 85 Blazer emissions equipment and standards.
The only exceptions I know of are that, currently, 1975 and earlier vehicles are smog-exempt. This means that you can do basically anything and not have to sweat it.
But, if you are running something newer, you are going to have problems. If they are in a really picky mood, they can run the block casting and/or displacement and you can get tagged on that if they decide that you are trying to bypass the regulations.
I haven't kept 100% up to date on the requirements as I started either buying new vehicles and not screwing around with them, or buying older smog-exempt vehicles.
As for your girlfriend's father's Camaro pushing 500 hp smog legally: there are a LOT of ways to increase the output on the F-bodies with the newer small blocks. These parts will have a CARB exemption number which means that the Kalifornia Air Resources Board has finally gathered that the replacement part does not contribute to increased emissions when used as the manufactuer recommends. At least that is the short version or what I understand about it.
Kalifornia IS the smog-nazi and trying to understand why they do things or to attempt to apply logic to their rulings will do nothing but drive you insane.
Good luck on your engine hunt. Personally, I'm a fan of the Goodwrench engines. When I worked for Chevrolet parts (12-15 years ago), if your Goodwrench that you installed had a problem, they handled all the labor and parts under the warranty. Even if you installed it yourself.