Just get a wreacked 5.0 or 4.6 and swap parts over. It's the cheapest and easiest way to do it.
Carb or EFI, you still need to change out the rear axle.
You will need new suspension, rear axle, tranny, engine and tranny mounts, radiator, harness, misc small things, MAF, and what you forget and remember when you need it.
Gears and T-locks the only thing you will notice other than a turbo/supercharger. CAI, exhaust and pullies will help some, but not as much as gears.
Do you have auto or stick?
Stick usually get 3.73 gears and auto use 4.10's.
A blown header and a blown head gasket isn't the same, but still you can still fix it.
I just got a new head gasket kit from Autozone so no worries there. You can even do it yourself during a weekend. It's basicly bolt off, then bolt on again.
I've done mine without any mechanical skills and I...
Matt runs a single port with +600rwhp ;)
There are more high powered singleports than split ports :)
ProCharger only make a 11psi supercharger kit to the 94-98 V6's and they survive it. That's 120% more boost than your maximum of 5psi
Change to a thicker oil. It's the cheapest and easiest thing to try out first.
And no the rods ain't hitting the oilpan, if they do you will see it if you look under the car.