You need knowledge!! Forget motor assembly for a while and get some books.. Every little trick in the book is what you need to win with rules like that. There are dozens of "little things" that when combined can add up to a cumulation of significant gains.
A couple of things I see right off the bat are;
1- Exactly what is meant by "extensive milling"? The winning motor will have difinitive knowledge of this and be milled to the maximum allowed. Also use the thinest head gaskets possible. If you are allowed a light decking of the block then do that as well. Those things are good for a few HP.
2- Anyone who can utilize an Autolite carb has an advantage over a Rochester as they (Autolites) use the same type of boosters that are found on virtually ALL performance carburetors. If you can somehow get one of those to work on your sbc and then block of the exhaust heat to your intake, that is worth a few HP.. Even if you are stuck with the Rochester I would still consider blocking the heat risers. But thats just my opinion.
3- The rules say "no lightening of rods, but ballancing is permitted". Ballancing IS lightening!! The whole concept of ballancing rods is to make the other 7 the same weight as the lightest one.. What I would do here is try to scrounge up a large lot of stock rods and hand select the lightest ones. If you do you will probably find some rather large variation. That is where there are gains to be found. Then use the lightest pistons you can find and then have it all ballanced. The quality of the ballancing job is important here. Make sure that whoever does it will match all of the rods and then lighten the crank to match the rest. That will provide an edge and may prevent catostrophic engine failure.
4- The camshaft you select is absoloutly critical, and complicated. Especially considering the limits on heads. There are lots of guys on the board that are WAY more knowledgable than me reguarding cams, but that is the one thing that gives you the most to work with inside of those rules. There are BIG HP numbers to be found there!! The two basic things I would suggest is due to your limits on compression gains I would look to minimize overlap but you want to maximize lift. Less overlap means more cylinder pressure, that will become torque. The stock valvetrain will determine your maximum lift.
That is the simple translation, and it is a good bet that most of your competitors will know that as well. The more complicated aspect is that you will also find that the best cam will depend greatly on your transmission, gears in the rearend and car weight. You want to find a cam that hits peak torque as you come out of the corners, whatever that rpm may be for your particular car. The lighter your car and lower your gears, the more you have to gain from a cam that places you into a higher RPM range. Good luck with this one!!
5- Lifters. Try some speed pro HT-817R's. You should be able to find them at scoogin dickeys. That will give you an extra 200-400 RPMs. Trust me on this one.
6- Forget the 305's. Go for maximum cubes. Go 350 and punch it out .60..