The package you have in the first post seems more than enough to do 700HP at the rear wheel. But it does seem overpriced IMO, but it does have a lot of good parts in it. If you are going to make over around 750 HP with a small block, an aftermarket block is a must. As is forged internals and good heads. If you have compared this to Steve Morris and NRE, you have looked at some of the better builders. If you want something less expensive, look to see if Blueprint Engines has something you could work with.
As for LS engines- yes, a junk yard LS engine CAN make 1000 HP- a few times on a dyno but not for long as it will dissassemble itself quickly. I have seen a lot of "1000 HP" LS's that can't run 12's in a 3000# car.
If you want a fun streetable ride, you really want torque, not HP. I know people don't brag on torque (unless its a diesel), but it is really what you want. If I had $12000 to spend on an engine ( you must have closer to $20K to consider a $17K engine that you will have to add turbos to), I would go with a Blueprint engines 632. 815 HP, 800ft-lbs of torque, pump gas friendly. No turbos required. AND a 30 month 50000 mile warranty! Try to beat that with a junk yard LS!
http://www.blueprintengines.com/inde...ssed-ps6320ctc