Find out the cam specs for the 350, as it might require a converter and gears which can add another $1500 to the project.
A stock 700r can't handle much more than a stock 454. Be careful.
A BBC will get around 25% less mpg as a sbc, if that is a concern.
The sbc engine your friend has is worth much more than 1000. Buy the engine and sell it for 2500 then put the money towards the BBC. (aluminum edelbrock heads and intake).
What heads are on your 454?