I admire anyone who's willing to take on such a project, as it is quite intimidating to the inexperienced. However, you have to start from somewhere and remember that engines on assembly lines are generally assembled by people who don't know how engines operate! You are one step ahead already by at least knowing the 4 stroke principles and what's needed to make an engine produce more HP! Now if you're just doing a straight forward rebuild then you need to mainly concentrate on cleanliness and basic clearances such as on the bearings (use of plastigage for this is perfectly acceptable), ring end gaps etc. Where I see amateurs falling down is in the cam and distributor basic phasing operations. If you go over and over the procedures in your head then you should'nt have a problem. Some people don't even know that a cam and crank need to be timed together! Then you need to know the principles for setting the lash on the rockers. Again, some people might make the mistake on setting them even when the valves are in the opening phases. Read various articles on what's required to get it right and then take on board the consistent methods.
Now, in your case with have a different scenario where you're modifying as well as rebuilding an engine. Going by books can make your head really numb and maybe put you off the task totally. If you were to assist an experienced engine builder you'd probably be shocked at the various short cuts he can make as the experience has given him the confidence to know what he can and can't get away with. If you were to ask him why he did'nt do such and such he might either laugh or give you a totally logical answer. That's the difference between an experienced engine builder and you in that you can't afford to take short cuts unless you've got someone in the know to guide you. Don't get me wrong, short cuts are not acceptable in highly stressed racing engines.........but when doing routine builds you'd be shocked at how many engines are literally thrown together and then run good! As I said, concentrate on the basics first before you look at the big picture, take one step at a time, ask questions when in doubt (you have us), give yourself a realistic time frame to do it, and never ever continue to work on an engine if you feel yourself getting tired as that is when care, logic and thoroughness goes out the window! Rob