Gday mate.
To answer your questions somewhat in order, to the best of my limited knowlege...
Firstly, wow thats a frOcking big overbore. I'd be a bit careful revving it, keep it under 5k personally, really probably not a good thing but give it a go it might be ok.
Whether to drill the block or drill the head will depend on the gasket you intend to use. In my thread "holden six cylinder head 101" I show a few different gaskets and explain the differences, and try to explain how you would choose which to drill.
http://www.gmh-toran...inder-head-101/
You can tap and plug the block/head if you wish, but i dont think this is needed if you have the right gasket.
I use Durapro items.
The rest should be fine. Depending on what your YT head is suited to it will have either adjustable rockers or bridge type rockers, these two need different length pushrods, this is also explained in the above thread. A 186 would generally have adjustable type but seeing the head is not the original item this could be different, best check up and report back.
As far as carb and manifold, with a small cam like that the headers and carb you have should be ok.
I would atleast get it up and running with that combo.
If you have the SU's laying around they could be worth considering, they are a brilliant setup, easy to tune, easy to maintain, and the constant velocity setup is so good on the street. But only good when there nicely rebuilt, new bushes in the throttleshaft, and have a good linkage setup. Depending on what condition yourse are in now expect to spent upwards of $1500 rebuilding them and setting them up. May be less, if there good, i cant see them, and you gave no info, so i cant comment more.
Holleys are good to, when there freshly kitted, there easy to dial in. I'd go atleast a 500, though these perform better with the 12 port head and the factory carb manifold with the carb base spun 90 degrees so the throttle blades face the wrong way. No off the shelf manifolds at this point face the carb the correct way, possibly part of the reason Holleys have a bad reputation on these engines.
The 4bbl 600 would certainly be on the high end of the carbs for your setup, the SU's you can get away with being a touch overcarbed because there constant velocity, at the same time the vac sec 600 you can get away with a bit with accelerator pump and secondary spring tuning to bring the carb back a bit to suit the engine. Again they need to be spun around on the manifold.
A 465 spun around would be a good option. Holley carb ratings are a bit funny, they rate the 2bbl and 4bbl carbs differently, a 465 4bbl actually flows a fair bit more than a 500 2bbl in the real world.
Hope this helps a bit, or atleast helps you hone in your questions a bit. Feel free to ask if anythigns unclear.
Cheers.
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