When I had my 7M-GTE out, I basically just cleaned the block down really well. I didn't cut it, or lap it, just cleaned it down to good metal. The head was machined, but not the block.
I put ina stock Toyota head gasket, and torqued down my ARP studs to 90 ft-lbs. I plan on bringing the boost up to 15-18 lbs eventually. I feel that theis should be fine as long as I take care of the cooling system.
I base that on the fact that Reg Reimer's 7M-GTE in his Mk2 is running with a stock Toyota head gasket, on stock bolts torqued to 72 ft-lbs, and I know he runs more than 18 lbs boost on it.
If I'd had the time to do a complete rebuild, I'd have had the block decked and put in a MHG, but I didn't have the time or the funds at the time, so I did what had a reasonable chance of lasting at least a few years.