5.3 makes more power than a 7.4 with better flow potential in the head options?
Yes. A 5.3 has potential to be built for the application. It is a strong block that can take a good amount of abuse.
Some info in stock and aftermarket head options in the link below. This does not discuss porting and customization which a book could be wrote about. But this is a easy to read overview.
Cathedral port cylinder heads have been mistakenly dismissed by many in LS-series circles for being “old-tech.” However, their thin cross-section allows for a high-velocity and smaller-volume runner design with excellent flow. For a street car, this design means excellent throttle response...
www.lsenginediy.com
He is talking about a 454 with aftermarket heads running 9.5 compression. Lets call it 420hp and a optimistic 530 ft/lbs that will cost 3 to 7k.
If you take a junkyard 5.3, swap a cam, put on some factory heads, and run a bit of boost you can make similar if not better numbers with better driveablity and longevity.
When it does go your not out 5k and 3 months of build time.
You hit up Craigslist, find another shortblock, throw a cam in, and your running the next weekend for less then $1000.
By using factory stuff you avoid a good amount of downtime. If you want ported heads(lookup playing with factory heads and the results a bit of work gives nice results) etc you can have a backup set sitting on a shelf ready to go in case you drop a valve when 7 decides it has had enough.