A lot of the guys say that the block can only handle 500hp and thats it.
Then its an aftermarket block, which will be a few thousand.
There wont be much else out there in an E Series car that will handle too much more. The blocks of the 6's may, but other parts will be their weak spot.
I can only say that i'm currently only getting 212rwkw and *touch wood* nothings given me any dramas yet. With numerous trips to the drags, after 6 months or so.
You wouldn't want a 350, as thats a Chev.
But you can get your hands on a 351 block and stroke it out to 420-427 Cubes, and it should fit, with a few hassles. This is what i wish to do in the future, but TerrosistGhia is undergoing this atm as far as i know.
So he would know more on that topic than i would.

ah k great.
i can never remember wether its 350 or 351. same as 428/429...

how would the block go being bored out that much??
it'd be fairly thin walled wouldnt it? e. pritty weak??

also, as i said, how would the drivetrain go? (diff/trans(manual))

the xr8 isn't really tuned as hard as the xr6... xr6 pulls everything it can out of the SOHC, and is tuned rather unconservatively for a factroy car of it's age, hence it likes fuel. xr8 cruises beautifully, nice highway fuel consumpotion.