Rubber baby buggy bumper B's sit too high to handle properly IMHO. It's not overly difficult to fix it, a front crossmember from a chrome bumper car (or you can notch the original crossmember and accomplish the same thing), this will get the nose down. The rack shaft will not line up properly after this is done, either get a chrome bumper car rack or have a machine shop cut/respline the original shaft. The rear can be easily lowered with blocks. Being a '78, it's already got the front and rear sway bars which is a good thing and you now have a nice handling car that doesn't feel like it's on stilts. Otherwise, there's not a whole lot of difference between chrome and rubber B bodys.
I just got through doing a rework of a late 18V motor like yours, so I can impart some information (wisdom is not in my repetoire 
).
The smog motor has 8:1 compression, way too low for any reasonable performance. That's easily fixed with early style pistons. Don't go overboard; on a streetable motor somewhere around 9:5-1 is about as far as you can go without detonation problems. A 6cc dish is probably about right if you will be using the 39cc chamber head Do not surface the head unless it's absolutely neccessary. If you have this done, see if the machine shop can machine another couple of cc's out of the piston crown (not difficult).
The 'warped head' may be a 'cracked head', if so that can get pricey. The cheapest way out is a used head, the early heads (pre-'75) are a drop on swap. Either way, if your engine has single valve springs a set of duals is a good idea. Make sure to get the retainers and the bottom spring cups at the same time.
These engines tend to wear camshafts pretty quickly, for whatever reason. There are all sorts of regrinds and new billet cams out there. If you want to keep the motor sounding stock with a decent power range, uise the early 5 main cam. The lift and duration are the same between the early and late versions but the late cam has the timing advanced 4 degrees for emissions reasons.
You can certainly replace the stock single row timing chain and gears with a double row, but there is no real need to do it. The single rows last just fine.
B's like better carburetion and free flow exhaust. Any set of headers with any Weber or a dual SU setup will run rings around the stock 1 piece intake/exhaust with the single Stromberg. Don't just chunk the old one piece manifold out, though; there is a market for them in states where these cars are still covered by emissions regulations. That's assuming it hasn't cracked like a LOT of them did!
