Like Will said above and I'd also add you should get Harry Pellows videos or CDs on how to rebuild the 356/912 engine, that's what I used to rebuild mine way back when. Even if you don't do the work yourself the videos will give you the information you need to ask informed questions when looking for a builder. You can sometimes find the videos on Ebay or try the website...actually seems the website is down, hopefully they are still in business but here's the address - HCP Research, 20655 Sunrise Drive, Cupertino, CA 95014. Harry would have been the guy to go to for all your 356/912 engine questions but sadly he passed on a while back.
With a 1720 big bore kit, Webers, 050 distributor and a few little tweaks you should be able to safely and reliably get between 100-110 hp Harry used to say. A weber kit will set you back about $1,500 so I bought a set of webers off Ebay from a guy in Italy, cost me about $150. I then kept my eye out for a set of weber manifolds on Ebay and got them for about $75. Rebuilt the Webers and rejet them myself and was all in for about $350.
I ditched the heater flapper boxes (still have them if you need them)in favour of headers which were VW units with the rectangular 356/912 flanges welded on. Also required special sheet metal for colling that I bought from HCP.
You need to really examine your heads cause these are prone to crack, especially around cylinder 3 which does not get a lot of cooling air. I think I paid about $1,000 back then to have a crack repaired, valve job done with new guides/valves/springs/seals, crank magnafluxed and polished, con rods reconditioned with new bearings that were redrilled and honed and I think I also got a main bearing kit for that price.
I got a 1720 big bore kit made somewhere in Asia called the NPR kit. I don't know if they are still available but according to Harry Pellows those old kits were sufficient for a road car. Shasta makes the 1720 kits too I believe but they are more expensive and likely worth it if you plan on stressing the engine at all. The NPR kit came with pistons, rings and barrels back then for about $350. I sold 3 used NPR pistons and barrels a while back on Ebay for about $300 so they are getting scarce. Another supplier is Venolia Pistons, I think they may have them in stock but if not they will make any pistons you want. http://www.venolia.com/
I also shimmed my barrels out using a rather thick 1 mm copper shim.
This was required as my heads had been flycut (sp?) to increase compression but I wanted it to be lowered a bit for longevity. Harry's books or videos will show you what you need to know to make that call.
Parts are getting scarce for these old engines and therefore expensive. Although these look so much like a VW, there are very few parts that are interchangable.
I gather you will mate this to either an old 356 trans or, better yet, a 901 trans. You'll have to decide which route to go because the 356 engine is a bit different than the 912...they are interchangable but its not just a bolt in exchange. Pellows book mentioned by Will has a chapter in it on what is interchangable and how.
A 356 engine, especially an early one, will likely be 6 volt so there may be some issues with changing that to a 12 volt like the generator, senders, etc. Something to keep in mind and again the parts to convert may not be limited to just the generator as I think the stands were different to so now you get into changing "hard" parts that are no longer made so you're going to pay "vintage" prices.
I'd look for a 912 engine as they were the last of the breed and supposedly benefited from all the past development. I'd also stay away from 1968 engines as supposedly they led a hard life with the smog crap that was put on them.
I sold my 912 engine last year to a chap in the UK. Got what I had into it, $5K, but at least it went to a good home in his 356.