I built a 318 with the KB 167 pistons and .039 quench distance and 302 heads and I used the smallest cam I could find and it was fine on pump gas. I did run premium but the MPG was up so much from the high swirl, tight quench... that it was much cheaper to operate than the original low compression openchambered 2bbl motor. If you run any kind of performance cam with that combo it will bleed off enough cylinder preasure that you could still use low grade pump gas so I say deffinately go with the 302 heads, they are cheap and work very good even OOTB. That motor was very snappy and pulled hard to 5000 RPM and that was stock valve sizes and no porting. It was probably makeing 300hp or so. A little port work 1.88 1.6 valves and a slightly bigger cam and you should be makeing an easy 350 very streetable hp on 87 octane. I would use an comp cams XE252 cam, close to a 360 2bbl cam but a hair less duration and a hair more lift, it should keep your TQ up as well as build good HP. The real high rod stroke ratio of a 273-318-340 helps it pull a little harder in the higher RPM range than the cam and heads alone would suggest.

In short don't be afraid to run the 302 heads on that short block give it a little cam, port work and slightly bigger valves and kick some 5.0 butts

PS I would even mill the heads .030 or so for more comp and run 91 octane if needed.