What crosses that line between helping or hurting value vs. improving performance?
Hi Paul, I can say unequivocally, without any doubt whatsoever, that the answer to your question is.... "it depends".
If you're talking about a super rare combination that's one of a handful ever built, then anything that strays from original is going to hurt resale value. If it's one of the "mass" combinations that were made in high numbers, a few judiciously chosen enhancements might also increase resale value. Better brakes and suspension make the car safer and more fun to drive, and if you really are going to drive it then either you'll have to run avgas/racing fuel, or you'll need to build that motor so that compression is compatible with the fuel you can get. If "go fast" is your thing then depending on how much you want to spend, you can fairly easily turn that 400 into a 550+ horsepower torque monster using readily available parts and services, still using the original numbers-matching block. (For the 3rd year in a row, the car that has won the title as the fastest street car in the state of Arizona is a 1974 Pontiac Trans Am. It runs low 8-second quarter miles and is likely to be in the 7's next year. In race tune he's in the vicinity of 1000 HP - and it's a Pontiac.)
The first question you have to answer though, is what matters to you most? Do you care most about preserving resale value (i.e. making the car valuable to someone else) or do you care most about enjoying it? (i.e. making the car valuable to yourself.) If it's the first, then generally you'll want to keep things original. Otherwise, build whatever you want and make no apologies.
For example, I myself have a numbers-matching 69 GTO hardtop, TH400 automatic, YS code 400 that I've had since college. I'm within 4-6 months of having it done at my present pace, if things go well. I needed to replace a quarter panel and also repair some other rust, so I had the car media blasted. The car was originally Palladium Silver with black interior, black vinyl top. When I got the metal work done and was ready to move on to surfacing/blocking, I had a decision to make. Do I keep the vinyl top and original color (even though I don't like vinyl tops and wasn't wild about the color) or do I nuke the top and paint the car whatever color I like? I quite literally agonized over this decision for a couple of weeks, even though I'd already upgraded the brakes, the rear axle, and especially the engine.
It was the "who am I doing this for?" question that finally got me going. (HINT: the vinyl top is a distant memory and this car is going to be mile-deep-need-a-safety-belt-do-I-don't-fall-in black.)
You'll get a bazillion opinions, but the only one that matters is yours. It's your car and you're the one spending the money on it. Do it however suits you.