Changing the cylinder heads is the single best bolt on upgrade you can do to an engine. While the standard 882 GM castings had the same port design as the old fuelie heads, they also got terrible 76cc combustion chambers. Then GM put them on top of dished pistons. To make matters worse, GM really never cared to zero deck the pistons. They were often .025 to .050" down in the hole. All of these issues combined to give the 70's era 350's terrible quench. The real compression could be closer to 7.5:1 than the advertised 8:1. This is also why you could run near 60 degrees of timing (initial, mechanical, and vacuum advance) without detonating. Even on crummy 87 octane pump gas.
There are a ton of great aftermarket heads out there now. Many are less $1000 now. Here at BluePrint, we have seen upwards of 65 to 70 hp increase using our heads over a factory casting. This is on a 350 with a fairly mild hydraulic flat tappet camshaft.
I would look at heads with smaller combustion chambers than the original 76cc heads to bump up the compression. This will also help increase horsepower. With a 64cc head, you would be closer to 9:1 compression. Also check out heads that have heart shaped combustion chamber designs similar to GM's Vortec heads. This design really helps increase quench with a dished piston.
There are many choices to look at for heads. Stay away from the bigger port designs, anything over 195cc intake runners, to keep port velocity up and the resultant increased torque. The bigger intake runner designs will make a near stock 350 pretty lazy in the lower rpm range.
For even more power, look at going to a bigger camshaft. If you don't want to go to a new higher stall converter, keep the duration measured @.050" below 230 degrees. Comp Cams Xtreme Energy line is a great start. They will produce good vacuum, for your brakes and headlights to function, but also increase cylinder pressure for better performance.