i too have been really wanting to do this converstion. in the beganing i wanted to do an ls1 convertion but after seeing how many people have done it and how much the engine is i figured the lm7 would be much better for my application.
my plans are to use a lm7 with a turbonetics 62-1 turbo running low pressure until i get enough money to bore it with lower compression forged pistons. the stock 9.5:1 compression ratio along with the iron block should be able to hold 6-10 psi with no problems as the effective compression ratio is still pritty low. see the thing is i could send $4k for an ls1 w/ 4l60e (340hp i think it was) or i could get an lm7 (295hp) for $700 with the same tranny (and they are easy to find at that price). turbo that for around $1000-$2000 and then in the future have it bored to an ls1.
now of corse there arent as many performace part for these engines as the ls1 but there is still a good amount out there. cam, heads, headers, maf's, etc... can be found at summit and im sure if looked i could find alot of other parts. as for the headers, you can pick up a set of tubular headers from summit racing for only $169.99. they can easly be modified to fit better.
in the end for me it all comes down to money, in my opionion this engine gives alot more bang for a buck than that ls1. not that im knocking the ls1, if i had the money i would buy one! if you target is to run 9's then get the ls1 but if you happy with anything after that then the LM7 and LR4 are great alternatives.
hey zgeezer, do you konw it a t56 from a ls1 would bolt up. i was told it wont but have trouble believing that as the camaros have the same auto as the trucks.