My 260Z w/ SBC runs in the X Prepared class, which gives me a pretty stiff PAX handicap (i.e. I have to run a faster raw time to be competitive with cars in most other classes). Usually my main competition in XP comes from Shelby replicars.
A couple things to keep in mind if auto-x is your main focus: 1) the V8 results in a heavier front end, which can be a liability on tight courses, given the Z's lack of power steering, and 2) the V8's torque and power will quickly highlight the lack of LSD if you're running the standard open diff R180 or R200.
Don't get me wrong....I have a blast running my Z in a variety of HPDE, but if your main goal is to be competitive in auto-x, there are probably cheaper and easier ways to get there. Obviously, there are plenty of guys who have had great success in their Z cars (both with the straight-6 and V8s), but the cars have typically been highly modified, driven by very experienced and highly-skilled drivers. (Now I'll stand by for a wave of blast attacks from my fellow Z enthusiasts. )