People used to cut down 360 cranks to put in 340's all the time. There is no reason why you can't do it for a 318 (same main size). I'm not sure if I would do it on a killer high HP motor, but nothing wrong with doing it for a street motor.

Overlap really isn't a problem. You'd run a cast 4" crank with a 318/340 main right? So why not run a 3.58" stroke?