I would agree on the suspension mods for good driveability/comfort and lean towards the 5.2 Mag. engine with an OD trans for fuel economy. About the rear end.....there are a ton of 8 1/4-8 3/8 units out there that would make a killer set up for this type of car. As long as you are not pounding on it with a high HP power plant it would work just fine and be much cheaper than a 9" or an 8 3/4.
Just my worth.