k, since no one else has answered this yet, I would go with either the decked block to 5 thousandths or 10...i went to a deck height of 9.010 and run almost 11.1 compression on 91 octane gas with absolutely no detonation, given I do have a big cam to bleed off some pressure, but the quench really helps. I think this gives a good combo of gasket and quench. I, as Streets did, would use o rings and studs if I was serious about my engine or had any boost on it, just to be sure and have the ability to really turn it up later without a teardown. To the poor fellow who detonated his new engine. It sounds not good to say the least, if that guy who put it together had any pride or whatever in his work, he should have offered some sort of warranty or even his word that he would 'help' you get it back together...even though I wouldn't really trust him again....since he put it together all wrong. Take the head off of the driver side and see what you have, it's the best and only sure way to tell. It sounds hooped enough to warrant taking the time and effort to take it all apart again. Then start ordering the parts!
As to the torqueing of the 350, its fairly simple, if you have the sequence in your Chilton's I don't have to explain it here. But always start in the middle and work out, same with headers, etc. The torqueing you should do in 2 or more steps. Firstly get them all in and finger tight, then torque to say 30 ft lbs and then maybe higher and then to your final torque or just do it from 30 to final, but use lube because torque is a shitty way of telling how well the bolt stretched to hold the head down, its more how much resistance there was to you turning it, so lube is required when torqueing. ok, good nuff