The 5.7L is going to make way more power and get better mileage than a smog legal 360 will hands down. Really improving the efficiency of the 360 while remaining smog compliant is going to take alot of work and you will still be compromised by the emissions rules. The hemi will probably have a higher upfront cost but don't be scared off of the project by the emissions certification, its not that hard to do.

-Jon