Milzy Motorsports has for sale a camshaft, heads, intake, etc. for 3.1 liter engines. If I do all the work myself the upgrades will run about $2K. Supposedly I will get 40 HP from these upgrades alone. Add custom headers (it can be done, but it needs to be done right), high flow cat, dual exhaust for more HP. Does anyone think it's worth it to do all of this?

My old Riviera had a 3.8, and I loved it. I am not opposed to dropping a SC 3.8 in it.

 

I am with your second option. Drop a SC 3.8L in it. It will cost you a little more but the power gains would be worth it IMO..