That is one sweet looking Classic. Half your luck in getting it let alone getting it for a good price. I'm jealous.....lol. Put in a top hat 3.9 or 4.6 block AND refurbish the whole cooling system. Or perhaps just install a new short engine without the top hat modification and don't overheat it - should be fine for many kilomteres/years. It seems to me that over heating is the cause of most engine block and head gasket problems in these engines. And whack in an engine saver kit.
Modifying that car for diesel or anything else and you might be just destroying the value and 'want or buy/sell factor' of one of the best original Classics I have seen for a long time.

