Do not put money into anything that you plan on replacing later. Any cash spent that way is purely wasted. I follow this philosophy for about everything. Even if you bargain hunt for everything that you put into rebuilding the GE (And/or swap a 7M-GTE in) you won't get the money back out when you pull the engine.
If you're going to fix the 7M-GE so that you can drive it, then do so, though if it needs a rebuild, and you really want to drive it first, then I strongly suggest that you find a decent running engine, or at least one that doesn't need anything on the bottom end. If you MUST swap out the HG, just do a Toyota OEM HG, and don't do anything to the bottom end. There should be no shortage of donor engines for this kind of project. Don't put any forced aspiration on it, just drive it.
I drove an '89 NA for 14 years, and it was a very nice car to drive. Not super fast, but enough to put a smile on my face when I wanted to open it up.
I'd have considered a stock CT-26 on the 7M-GE at stock boost levels to be okay, but I wasn't going to do that without a good fresh, solid block to start from, and it was easier to swap in a 7M-GTE instead, so I did.
I'm doing a ground-up rebuild of a 7M-GTE, and when I'm done I'll have spent about what I would have for the longblock for a 2JZ-GTE. I'll have a known good build to work from and little to worry about. I also have plenty of options for used parts, since it's all stuff that the car came with from the dealerships here. For the money spent, I'll have more power than the 2JZ would have put out even after spending more money on the single turbo conversion.
