Agree on safety - should be in compliance with the rules and it's a good idea to go above and beyond. I've got a 7.5 cage in my 67 and I've only been 8.6 with it. I wear a 15 layer suit too, when I've never been asked for more than a 5. I don't think I'd want to go faster than 9's in a small tire car without a funny car cage over my head...
A 7.5 cage can be built into a 2nd gen - you don't have to buy/fab a chassis and drop the body on. I'm not saying it wouldn't be easier, just that it can be done if you have the drive and will to do it. Don't fab a thing though without buying a copy of the SFI spec book and reading it. With lots of motor comes the need to pay at least equal attention to the chassis - or just be happy running de-tuned
If you're not opposed to a back half a 4 link, 33x18.5 tires and wheelie bars would be the quickest and easiest way to solve traction issues. If you want to do the small tire deal though rest assured it can be done. Ire65GTO makes some good points in that regard. I'd second them and further reinforce the 4-6" of travel and push hard to be on high end of that. Make sure everything moves freely, get any forward rake out of the car. Calvert also sells a shock setup that is inexpensive and we've had good success with. And at your power level plain and simple you're gonna need a boost controller. You should be able to get the car to take 800-900hp on the hit and from there ramp it in depending on various track conditions. Good luck with it and have fun!!