I don't know what you should do. If you plan on Modding the SS you could take the money you save on a newer model & buy a 98 then take your savings and use them for mods. I can't tell you what to do. If you actually get an LS1 car I can give you advice on how to mod it. If you get an LS1 car you might lose interest in your project car.
The initial expense of buying an LS1 car might be kind of steep, but the cost of modding one isn't that bad. The parts are a little more pricey than the same parts for a regular small block, but the horsepower gains from the same mods are much better. You can see gains of over 10 RWHP just from a $125.00 Lid, Headers will get you 3 or 4 tenths in the 1/4th. Custom LS1 Edit tuning & dyno tuning can get you another couple of tenths.
If you look @ Gm High Tech Performance this month there are about 10 different cars that they test on the track. 1 or 2 of them are in the 11's with stock cam & exhaust manifolds, just bolt on's, ET Streets & Gears.
It took me about $500 worth of mods on my 02 Formula to go from a 13.10 @ 107 best stock time to a 12.59 @ 113 with just minor bolton's. Another $800 worth of Nitrous Equipment to get me into the 11's, but I don't run the Nitrous anymore, not because I was scared of messing up my motor, just because the Car is my wife's daily driver and she didn't like the idea of me spraying the motor. She is all for seeing the 11's NA though.
If you haven't seen my Formula Check my Photo Album, I have a Formula album in there. The Black car is the same exact car as the Orange / Copper car. Just got new rims & paint.