Sorry for the bit of a thread revival here, but I searched for the answer to this question for a long time without getting much farther than "replace the motor". Hopefully, this can be of some help. From personal experience:
1) If you want to go fast (and by that I mean, not get dusted from a stop light by an F150), stop reading now, pull the motor and replace it with a 350/403/455. Or buy a turbo car. But if you're really set on keeping the 307...
2) Going to dual high flow cats won't really gain you anything. Part of the problem is that you'll have to replace the brace for the transmission as it's only humped for the exhaust on one side. There are ways around this from buying a very expensive custom made peice, to cutting two in half and welding the two humped pieces together, or bending the pipe below the brace. But in the end, the heads are the main problem and the exhaust isn't going to let you flow any better than that horrible head design.
3) Headers won't be a gain for the same reason.
4) Instead of investing in that, find a decent 2.5" dual exhaust cat-back system and put that on. If you insist on running a cat, you can, but I fabbed up a test pipe and run that as we don't have emission requirements. This will make a difference, but true duals is overkill for the gains that you'll see. I saw a gain in the upper RPM band from this for about $250. You'll need to buy an exhaust hanger from a GN for the left side pipe that goes up and over the rear axle (the left and right brackets are not the same, no matter what anyone tells you!!). Run the Monte Carlo style mufflers for ease - just make sure you get pipes that exit out the side instead of the back.
5) Instead of having a custom cam ground, try to find the cam that came with the '87 H/O VIN 9 motors. You'll gain 40hp from the swap with no problem and probably a lot cheaper as you won't have to worry about the pushrod length, etc..
6) If you're dead set on swapping heads, go with a set of the 5A heads from the earlier 307. You'll have to change exhaust manifolds and intake as the ports won't line up, but those can be junk yard finds. Doing any sort of head work is pretty pointless as it's the size of the valves and the swirlport head design that's the problem. You're not going to correct the bad design with a port and polish.
7) Replace the rear gears. Find a 7.5" rear end with the 3.73 gears and a posi out of a Monte Carlo, 2+2, or H/O and it's a direct swap. If you go with the 8.5" from the GN, I believe that you'll have to have a new driveshaft as well. This will make a world of difference.
8) Tune the carb up well. Make sure that the secondaries open up all the way (they probably don't. You have to bend another bracket out of the way to allow them to go fully open).
9) The only other mod that I might try is some sort of shift kit that would raise the RPM of the shift points. I find myself manually shifting the car a lot to hold the RPM coming out of first gear. If you don't, it drops into second way to early.
Honestly - tune the carb, swap the rear end, and get a cat back system and then save your money for something else. This motor won't hold supercharging, turbo, or nitrous. It's a great daily driver motor, but it ends about there. Even with thousands of dollars in mods, you'll be lucky to break 200hp. Hope that helped.
