I'm going to point something out here, what do you want this car to be? Do you want a 1/4 mile car that's still streetable and are you planning on highway driving with it?
You will spend thousands of dollars to make this car a quick 1/4 mile car that's still good on highways. From your questions I can tell you're young, nothing wrong with that, but you have to remember to what standards these cars were built to back then and thier limitations. In stock or near stock form they handle and brake worse than todays cars.
Now here's what I'm getting to,
If you don't have the funds to do the car up completely the LAST thing I would do is the motor. Just get the current motor running well in stock form. As mentioned above start from the back and work your way forward as you get the funds. The problem is if you modify or replace the motor you're leaving many weak links in the orginal car that will break and cause disappointment and more money. Remember a beefed up rear,
tranny, suspension and brakes will do fine with a stock motor, not the other way around. Having a powerful motor will cause problems with the stock brakes, especially if they are drums all around, plus the stock suspension won't handle well. Back then these cars went fast very well on straight aways, forget the corners. A current Corolla handles better in turns than these cars including Mach 1s did in stock form.
The other thing is the
tranny in that car is an issue. A C4 has no overdrive and if you put tall gears in the rear the car will be quick off the line but it won't do well at higher speeds like on a highway as the engine will be wound up. An AOD swap if you still want auto or a T5 if you want standard would give you overdrive and the ability for the car to be an all around good driver.
Subframe connectors might be something you'll want too to allow the new, upgraded suspension to help the car handle better.
I would also make sure the body is repaired before spending money on any upgrades. You don't want the car falling apart while you're trying to make 1/4 times.