With an 8 grand budget for both engine and transmission that's going to be tight. A quality exhaust system can cost you upwards of a grand with headers, depending on how much fabrication you can do.
Yes, you can re-work the stock cylinder heads, but the price per performance drops quickly when you need to either pin the rocker studs or remove the press in studs, drill and tap for thread in rocker studs, open up the push rod holes, re-surface them, cut down the guide diameter and height, install PC type valve stem seals, etc, etc.
Edelbrock Etec 170's are a better head out of the box than the stock heads. Manganese bronze guides, thick decks, decent flow.
The stock bottom end, if in good shape can make more power, given more camshaft and cylinder head flow. Before anything else, do a compression test and a leak down test.
What I suggest as a recipe: Stock bottom end, fresh set of bearings if you feel the need. Install a set of Etec170's, the 200's will lose torque everywhere and some hp, if you had 383+ inches, they would be a better choice.
Camshaft: that depends on your tire size, overall vehicle weight, gearing, and transmission choice. Call a couple cam companies and see what they will recommend given your engine displacement, tire size, gearing, intended use, etc. The biggest I would suggest would be the LT4 hot cam... and even then, it may be too much to give you a decent idle and enough vacuum for reliable brakes. Assuming the lifters are serviceable, re-use them. Going too large on the camshaft is the worst thing you can do for power.
Rockers: if you have the bucks, Crower has 1.7, 1.8 and up to 1.85 - 1 ratio rockers for the SBC, must use 7/16 studs. You will have to use pushrod guide plates with them, but I am not sure what the Etec 170 has for stud diameter.
Of course, if you want to use these large ratio rocker arms ( instead of the factory 1.5 ), they can transform even the wimpy stock L31 camshaft into .511 lift intake and .528 lift exhaust, and add duration. Going to need to purchase a pushrod length checker and check geometry, and order the appropriate length pushrods.
Port flow tapers off around .500" anyways, so duration is about the best thing you can add after lift is in that area, but too much is not a good thing. It's all about area 'under the curve', if you want airflow.
Intake: Port the lower intake, there is gains to be had, especially around the mounting for the spider. A V-max manifold spacer kit will also give you great gains in the amount of airflow around the spider. If your poppets or MPFI spider is serviceable, no need to replace it.
Exhaust: A quality set of long tube headers with 1 5/8 or 1 3/4 primaries. The longer the better. Pacesetter makes a nice drop in set of long tubes for these trucks. Dual 2.5" pipes with an X pipe as close to the rear of the transmission as possible.
Transmission: local builder, good quality parts. Keep the stock 4l60E transmission. If pressure test is OK, no need to put a pump in it. Change all of the clutch material out for high friction units. Best get a new sun reaction shell, 97+ GM OE are decent, but there are others as well. Trans go HD2 kit, larger servos for more holding power. Put in a new set of A and B solenoids at the same time. Sonnax makes some good parts, and they have a tech section on their website.
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A worked over L31 with the above will not be a bear to tune, drive, or deal with on a daily basis. Keep the factory intake and black box, it's your least expensive option, but have someone like Black Bear performance tune it for you.
