Here's a couple of quick answers:
1. The lumps are for later inlines in the 194-292 series, not the 261.
2. The stock 848 head will raise the stock compression unmachined to around 8:1. You could just machine the 261 head to get the compression you want.
3.It's possible to bore the block .100 over, but not advisable for a street engine. Common is .060 over.
4. Check the membership roster for Utah.
5. Modifying any engine is never cheap.