A stock 8-cylinder engine of the vintage you mention is pushing 315-330 BHP. With the "normal" mods of porting, headers, and general intake and exhaust airflow improvements, I believe that gains of around 50HP would be possible.

With more radical means, such as increasing displacement from 5.0 to 6.0 L, combined with the mods above, I believe that gains of 100-125 HP are achieveable. This would be a displacement increase along with compression bump. I believe that the stock injection system could handle fuel delivery needs for this type of setup.

Any normally aspirated motor with a HP rating of 400+ HP, with factory reliability, is doing quite well. To extract much beyond this, an exponential amount of money would be required. Even to go to the route I described, with the displacement and compression bump, you are probably talking $20,000+ including labor.

I would stay away from the 12-cylinder motors because of their complexity. The 12-cylinder M120 differs from the M119 8-cylinder and M104 6-cylinder by essentially being a pair of M104s grafted together. Many if not most engine accessories are duplicated, meaning there are two of them. This includes things like two throttle bodies. This increases costs dramatically both for building and for repairing.

The 8-cylinder motor is more reasonable in this regard and I think with appropriate tweaks, capable of output levels not too far off of the 12-cylinder engines. I would shudder to think of what it would run to "hot-rod" a Mercedes-Benz M120 12-cylinder motor.

If you are not prepared to drop $20,000 RIGHT NOW to mod an 8-cylinder motor, if that number gives you the creeps, then you should probably stick to a Ford or Chevy.

Cheers,
Gerry