The 37-38 Ford 21 stud engines are the best option for a driver 32-36 Ford (other than an LB if you can find and afford it). A good clean 85 hp flathead is a great match for the stock chassis. I would fix what you have, and drive with a smile.
Kurt, what tooling is required to do this?
I would think this the best option and keeps it as a flathead. The chassis and other components will like the flathead better