"The bore is a very small 3.736", which means you can't bolt any good-flowing heads onto it because the valves would hit the block deck"

That is something you need to watch out for, but there are heads that will work on 305's. The problem with the stock heads is the tiny little intake and exhaust runners - they just won't BREATHE! GM made some pretty good heads for the 305's that were used in '75 and later Z-28's. They have 1.86" dia. intake valves and much improved intake and exhaust runners, but still have the 61cc combustion chambers. They are not overly plentiful, but they are not expensive either because the valves still aren't big enough to keep all of us 350 lovers happy.

You can put 350 heads on the 305 without worry of deck interference as long as you don't open the valves too far, but most 350's have 72cc combustion chambers and anything you gain in airflow through the engine would be lost by the lower compression ratio. You can hunt for some closed chamber 350 heads or early model 327 heads, but you will pay dearly for them and then spend more money having them reconditioned. Best bet for the money would be the late-70's 305 Z28 heads.