Is your pump fuel straight Ethanol or Methanol now?
As far as main caps I wouldn't, and don't', use steel caps on any cast iron block, ductile iron or maybe aluminum but not steel
As far as bore size I would bore it just big enough to get the bores straight now and leave some meat for later development
I have built several 340 NHRA legal stocker 340 motors that made 430 HP at 5900 RPM with stock 1971 heads, intake, carb and NHRA legal hydraulic camshafts and lifters
That was a long time ago, early 1990s, much better parts available now
I built one pump gas 340 4.0 inch long stroker motor with a set of race mildly ported race W2 heads that made 514 HP with one 850 CFM carb. on a cast single plane W2 intake using CA 91 octane pump swill
Stroke that rascal and put some good heads on it and let it rock