Yep, hot-rodding anything always snowballs into more money. What your guy is suggesting is building a real nice engine, using all aftermarket parts , except the block. You'll end up with at least 6-7 grand in the finished product, and for less than a grand more (if you had bought and had a stock block machined) you could have an aftermarket block with splayed caps and 540 or more inches. Or go the other way, use your block with main studs and a 3.76 stroke factory steel crank, re-work some factory heads, then all your big expenses will be pistons, rods and valve train. Decisions, decisions....I guess it depends on how fast you want to go and how soon. I am a machinist by trade and build and machine all my own stuff, yet still come to a crossroad trying to decide what to do next. I hate saying "I should of" after a build. I would build a budget motor with what you have while saving up for the world-beater down the road. You can always sell it when it's time to pay the bill on the next one.
Feel free to PM me if you want. I have 40 years experience building engines for a living, and more than that being a cheap SOB who wants to have a good time.