Don't even think about an LS. Enjoy what the car is and work with what you have.
The 3-speed trans is most likely the "Dearborn" Ford 3-speed that was adapted to fit the Pontiac. It is a fully synchronized 3-speed, cast iron case, heavy duty, and a "top loader" just like the desireable Ford top-loader 4-speeds. It is a nice smooth trans and never heard of one breaking, even behind a GTO 400 CI.
Pontiac only has 1 block size, from 1955 on up, NO small block or big block. Bore and stroke changes, as do the main bearing diameter. There is no "medium" block.
The HO 326 uses different heads. Pontiac's typically use a flat top piston. The compression is then adjusted by the size of the combustion chamber, or CC's of the chamber. The lower compression will have a larger combustion chamber.
Can you put a 4-Bbl on the 326? Sure, but you won't get a bunch of gain, just a slight amount. It will be an AFB, typically around 500 CFM's. So you would need matching intake used for 1965-1966, and some 1967's that used the AFB carb. It is a vacuum secondary carb, so it'll only use what it needs versus mechanical secondaries.
Can you improve the power of the 326? Of course. But you will also get many opinions and most will lean towards installing a 400CI, or a stroker kit in a 400CI to get 461-ish cubes, and then go from there. There are of course advantages to using a 400 as your base engine if you want to go that route. The 326 can be made "peppy" and fun, but won't have near the HP/TQ capabilities of the 400. So it boils down to what you want to get out of the car.
My personal opinion is to keep the 326 and put some old "goodies" and modern upgrades into it in an effort to keep it original and, be different from every other Tempest with a transplanted 400, or GTO cloned appearance. But I get it if you want to have a tire shredder and have the finances to put into the engine, trans, rear-end, cooling, and beef up the frame/suspension/brakes. HP/TQ has its costs, and with a Pontiac, not as inexpensive as a Chevy or Ford small block.
Many do the LS swap as they make kits/parts to install them, but they too will add up quick with all the items needed for the install. So it is an option, but you no longer have a Pontiac, you'll have a Chevelle and that kinda defeats the purpose of owning a Pontiac.
Plenty of info on this forum as well as guidance and help when/if you need it.
