I wouldn't use 165 runners on any SBC build; economy or performance. A 180 or 195 would be fine, but you'll find more economical heads for the street in the 180 runner. Factory Vortec heads are probably the best bang for the buck, and easiest to find. If the block you start with is a later one piece main, and set up for roller rockers, I'd definitely go with a roller cam/lifter assembly for long life.
You'll need to go to a Vortec intake with the heads, but they're pretty reasonable for dual plane aftermarket intake to fit a 4 barrel carb. And I'd put some headers on to help performance and economy. Don't need to go exotic with headers, as you'll probably never open them or go to the drag strip with a daily driver economy build.

 

I will definitely not be going to the drag strip. Has anyone had success with getting 15 mpg out of a 350? I drive very light footed. I know the 3rd gen guys with the tbi are getting in the neighborhood of 17-20 and more on the highway.

I have about 7500 to spend right out of the box which will be done on making sure it is reliable. I am not looking for a show car right out of the box. I am looking to buy something in the 4000 dollar range that is in "decent" shape. I can tune it up and get it running right and see how much more money I can save up to get a good drivetrain combo. I can buy a latermodel crate and go from there and couple with a 7004r transmission that will handle the horsepower as I decide to add more.

The killer for me is that I need to be at 15 mpg in the city with some highway driving. I am looking for anything from 2nd or 3rd generation. Would prefer something with no smog tests if I can get away with it. Older than 89 and I am going to have to add shoulder harnesses,

 

Not sure what the cutoff is in your area, but most states that have smog testing have a 1974 cutoff, so '75 or newer will be tested. Getting a older 2nd gen is going to tax your budget more, as they just cost more than the later 2nd gen Camaros cost.
Sounds like your best bet to accomplish everything you want (3 point seat belts, mileage, smog pass) would be to bite the bullet and get a 3rd gen. Better odds you'll get where you want to be, especially if 15 mpg city is a main goal. Fuel injection is easier to get there than a carb, but you can do it with a carb if you're careful, and well tuned.

 

That is what my guy has been leaning towards. I honestly like the 2nd gen body style a little bit better but I am a fan of both. In Texas, we have a safety only inspection after 25 years so the smog testing is not a concern. I don't know the weight difference between the two generations but I do know that injection of any form will typically be better on gas mileage..

I imagine I could do a swap of some sort to upgrade to newer stuff but then you get into budget issues. I will almost guarantee I will have more than 7500 dollars in this when it is all said and done but that is what I am going to start with....maybe even less.

Any more feedback is welcomed and appreciated.

 

One thing to also consider is your dollar will go much farther towards buying a very nice 3rd gen. They sell crazy cheap around here, and for your $8k limit you could get a super clean, low mileage car!
Last summer me and a buddy were at a garage sale and the lady had a '91 RS 305 V8 Camaro sitting in the garage with stuff piled on it. It had low tires, and lots of dust, but very straight looking. My buddy asked if it was for sale, and she said she'd sell it for $750. Hadn't run in 15 years, so we towed it home. Put about $500 into it for a new fuel pump, an throttle body rebuild kit, and a new muffler. Ran and drove like a new car, and he resold it for $3,000; which was still way below your budget.

 

My wife has told me that I had better buy what I really want this go around and not settle.

I definitely prefer 2nd generation. Does anyone know someone in the Dallas Metroplex selling one. I would prefer to buy from someone who has a love for these cars that has taken care of one. I have to either buy cheap and be ready to rebuild or buy one in good shape. I am going to end up with an up front budget of 7000 and finance as I go. I do not expect perfection at that price point and will make sure to spend my money in the right places. Everytime I see a 2nd generation, it makes me realize that I want one even more.

 

Your wife's a smart lady. If you don't buy what you want, you'll always wish you had!

 

Question, I have run across a few cars that have been converted to carbs and I am not sure why. Can they still pass inspection?

My other question, how much would it cost me to get set back up to the stock TBI setup if that is what is needed. I am having difficulty in my local area finding a decent 3rd gen.

 

im not sure of the standards you have but there are oldies laws that makes cars after 25-30 years old not have to pass inspections check the local smog office

 

Thought you had decided a 2nd gen was what you really wanted? If you are now thinking a 3rd gen, and it's carbureted, it might not pass inspection at whatever test facility you have there. I would not even consider buying a car that's been modified to run a carb, and convert it back to a throttle body EFI. You have no idea what may have been hacked on the wiring by the previous owners.
Crazy that you wouldn't be able to find a decent 3rd gen under your budget down there? They're everywhere here at giveaway prices, and in very nice shape! Like I mentioned; you could buy a one way plane ticket here to buy one, an drive it home, and still save thousands.