I guess I am on the other side of the street on this. I have about 13K in my Mallett. Knowing what I know now, I would never do it again. I originally bought it to have fun with, tear around town, drag race it or take it to autocross. Planned to have nothing but fun with it. Now it sets 350 days a year in a garage, with AC and heat, covered under two car covers. Never drive it because it is too much for me, and worried about someone hitting it. I now have it insured for 80K claimed value, it recently appraised for 80K thru a classic car sales company. So if I were to sell it for 30K, what others are going for, I would make good money on it. This car retailed for near 66K plus a minimum of 10K in the engine in it now (my guess). I doubt I would even consider selling it for 40K. Being a classic car guy, I see the historical value of this particular car.
I have thought about building a V8 conversion to just beat the crap out of. And I think it can be done for the 12K number if you buy a descent base to start with. A 2500 car with 100K on it is not going to be the best idea. You need a solid foundation for 400-500 HP.
So what I would recommend, is find a real nice GXP and do a few things to it. Keep it close to stock and drive the heck out of it. You can buy a real nice Solstice GXP for the 1200k you are talking about. Far less headaches, insurance more reasonably priced, less smog problems and way better mileage.
If you are near SoCal, I would be happy to let you take a look at mine, to see the modifications made by Mallett to the frame and suspension, wheels/tires and brakes. Can put it up on the rack for you to look at to. Have a mechanic that says he can do it, but have not checked the price on that yet.
Damned flood coupe is still holding all my extra cash!!!