I didn't realize that it was a NAPCO, so whether or not the rearend gears can be changed, I can't say. 123HP is the gross HP listed in my books, so is the 148HP on the 261.
If you are turning too many rpm's for the 235 to handle, the same will happen for the 261. Adding more HP will obviously make it take off quicker, but it's not going to improve the top end speed much, especially in stock trim. If you do decide to rebuild any of these engines, I would recommend getting it balanced if you intend to turn more than 2500 on a regular basis. There are gear calculators available online at some of the places that sell differential parts.
Seems Tom Langdon told me once that putting a 302 head on a 270 will require special pistons. $$$$. Thats why I would recommend a 302 in the first place. I read once that a 270 can be punched out to a 302, but Tom says no. I guess, sonic check the block and consult your engine builder.
