help me decide

Your expectation of the car really is the determining factor for what type of heads you should get, aside from the cost factor of course. You're probably seeing a very moderate gain with the milled heads, but from a performance standpoint, not enough to really feel a difference. Adding the "B" cam will net you more power; I just can't really offer a guess as to how much. Do the '85s have valve reliefs in their pistons? I don't remember, but I know the '86 didn't, so that would be a very big determining factor as to whether or not the cam will work well with your heads. Being milled, the valves are already closer to the pistons, and with the increased lift, you'll be looking at an increased possibility of piston to valve clearance issues. If funds are limited, check out some iron GT40, or GT40P heads for a good bang for the buck head. There's been plenty of guys running 12s on motor, using both heads, and they'll really be able to take more advantage of the B303 cam.
Now for the rear end, I'd really recommend picking up an 8.8 rear. Yours could last under the mods you have in store, or it could be the weakest link in your drivetrain. I'm not really the best with choosing gears based on combinations, so I'll let someone else chime in here at this point. Good luck!

Is it gonna be a daily driver, street/strip, track only?

I'd get some AFR 185s, 4.10s, and a custom cam. E5s arent worth ****. You'll also need an intake. TFS Track Heat, Edelbrock RPM or RPM II, or Holley Systemax come to mind. I'd probably do the RPM II.

Crap. Forgot you were carbureted. Yeah, I'd get an Edelbrock RPM Air Gap.

Yes.