I'm helping a friend do the same thing.
Start with the required machine work on the block, and chose the pistons accordingly. Beware of the new piston choice.
340 normally had high pistons and open chamber heads (the pistons protrude above deck and into the head).
The replacement KB piston is made like that too.
It's possible to get Diamond flat-top pistons (from Hughes). And thus use closed chamber heads to keep compression around 10 (it may be cheaper to buy new heads than to rebuild the old ones, so look at the piston type/head type/block work at the same time).
My friend's block needs a bit of work (the bores look fine, but the decks are of different heights (close to one mil shorter on one side!)
I would also suggest new heads, rebuilt iron heads can be had for $500 a pair (
http://www.aeroheadracing.com/id6.html )
Hughes engines has a couple nice cams for the small block, my friend will probably take the HEH1928AL camshaft and 4600-P
heads (I modelled the engine and got a simulation result of 335 HP at 5500 RPM with manifolds and this cam, with 9.5 C/R).
The 20-212-2 cam from Comp is similar (that is the stock replacement from Comp for the 340ci). And the HEH2328AL cam is good for a trifle bit more power (and the 20-223-3 from Comp is similar to that one).
The biggest improvements on the simulation though, were the prepped heads and putting on (small-tube) headers (went from roughly 340HP@5500 to 400HP@6000 and from 375 lb.ft to 413).