1. A small block will drop right in.
2. If you know your engine specs, a computer dyno will get close, if not, you'll have to use a chassis dyno.
3. ?
4. Aircraft stripper is easy & a little messy, a DA sander is slow & dusty & time consuming. If you have more money than time, you might get it soda blasted for around $500. Unless the paint has tiny cracks (checks), or is peeling, I'd sand it & paint over it. Just don't paint or prime anything unless it's sanded. finish sand with 180 grit for primer, 320-400 for paint.
5. Order a mandrel bent exhaust system. They are easy to put on & flow great. Most exhaust shops use dies to bend the pipe, & it literally cuts the flow in half. I got a quieter flowmaster system on mine, 2 1/2 duals with one big muffler between the rearend & gas tank. 2 pipes in & 2 out