Unless you wanta go the Al route, and DX(direct exchange) your wife for a 350, I'd say definitely go with gears first. Considering you have a grand to spend, if you're not in a big hurry, and don't mind spending some time in the salvage yards, you could look for a transmission, driveshaft, and rearend out of a 84-87 Monte SS (200-4R, 8.5" 3.73 limited slip rear). Unfortunately, the chances of finding them are slim and none, so you're best bet would be to just get a 200-4R, or a 700 -R4 out of anything in the yard that came with a V-8, and pay a shop to shorten your driveshaft. Then you'll have an overdrive gear, so you won't have too worry about your highway mileage, AND the first gear in either overdrive tranny is lower (numerically higher) than in a TH-350/400. All this should easily eat up your grand, but if it doesn't, I'd go with exhaust first, since you're not really looking to race, go with headers, and true duals. All this will give you a car that sounds great, and does great burn-outs. You probably won't hook up and accelerate very good from a stop, though, until you add suspension mods, and larger, stickier tires.