Your best bet for a successful reliable rebuild is to bite the bullet and have the critical parts properly machined. For the block, the machine shop can measure the size and taper of each bore which will tell you how extensive the machine work will need to be. I have yet to have a 235 or 261 that did not need an over bore and hone. besides, you will be much happier with bores that are clean, straight and round as the building block for your motor. In addition, the deck will likely need to be machined just to make sure you have a nice flat deck to keep the head gasket from failing. The stock pistons on a 261 sit pretty far down in the cylinder at top dead center, I think something like .115 or more so pleanty of meat for machining.
Crank, have it checked, you might get lucky and it may not need anything more then a polishing and new bearings. More likely it will need to be ground on the rods and mains. While you are at it, you can, if you want, have the crank balanced just to make sure no out of balance running vibrations. Also, have the snout of the crank drilled for threads and a balancer bolt, mr. Gasket, small block Chevy. The threaded snout will also allow you to install the balancer with a balancer install tool instead of a block of wood and a hammer that can and frequently does result in damage to the crank thrust bearing. Do not try to have the mains align honed or align bored. I have never had a 235 or 261 that needed it, and when it does have to be done, it plays havoc with the timing gear clearances.
Head rebuild, standard stuff, have the deck machined for head gasket seal. Rebuild the rods, new rod bolts are near impossible to find now so you will have to use big block Chevy bolts and have bolts shaped to 261 shape after they are installed (for cam clearance).
Any 2X1intake will work. Consider using adapters and a pair of 1974 ford pinto Holley Weber 5200 carbs. They are a progressive two bbl with a small primary and a larger secondary and run really well. The 74 version of those carbs has threaded fuel inlet which makes fuel line hookup easier and cleaner. Run hot water to the bottom of the manifold if you are going to run Fenton’s or Clifford headers. Weld a plate to the bottom where the stock exhaust would go with fittings. I used a bolt on plate and gasket, it always leaked. If the underside of the manifold has sheet metal plugs staked in (and the offy will) you have to weld aluminum plugs over them or they will leak water. I ran a Weiand intake with adapters and these carbs for many years and the combo runs really well and very reliable.
You can step up the the Clifford 2x2 Weber dgev 38/38 carb. It s pricy but will really wake up the motor. That is the set up I am currently running.
Finally, spend the money and have the distributor rebuilt. You will be surprised at just what a difference it will make. I just had one of my old spare distributors running on my sun 405 distributor machine where i discovered that the advance is coming in way way late so all gummed up under the point plate or a broken spring. No way will a motor run at its best like that. I also put an nos distributor on the machine and it is also not quite right. The rebuilt unit I did for my 261 is spot on and starts and runs great.
This is my son running my car down the dragstrip at this year’s trifive nationals. It was his first time driving the car so dad told him to take it easy. The motor is very modified but you get the idea. Nice careful machine work, good quality parts, you will have a nice runner on your hands.
https://youtu.be/lMVz66tyrKQ