Dunno about the S-10 swap, that sounds like a good place to start for the simple fact that the front suspension will be LOTS better and it's cheaper to get the modification parts should you want to lower it. However, there are a load of excellent Mustang II based suspension kits that you could weld onto your frame without much fuss. If you opt for the stock frame tho, look into boxing the rails & adding a couple cross members to stiffen her up. In the current state, this is the best time to do it.

Chevy 350 is one of the easiest engines to find parts for and you can make loads of power with them. The 350 Trans is a good one as well, same deal with finding parts, but I like the 700R4 that Ed is running. That 4th gear is a nice thing to have when you drop it in an old truck like that. I'm betting it has a pretty low gear ratio in it & it's nice to be able to go highway speeds w/o turnin 6K RPMs! The best part is the 350 & 700R4 was a common setup in the Chevy Astrovan, and there always seems to be a couple in the junkyard waiting to be pilaged.

Looks like a fun toy ya got there, have fun with it!