32 valves sounds like an overcomplex, unreliable nightmare. If that engine is based on the "modular" 4.6L OHC V8, those are known for lots of head and manifold gasket issues.

A better choice would be the old reliable Ford 5.0, which gives well over 200 HP in HO spec, and is almost as bulletproof as a red block Volvo. Better still is that there are kits available (for about $1000) to install a 5.0 in a Volvo, with motor mounts and all the fittings, adapters, wiring harness etc., to connect the A/C, PS and so on. You can use either the Ford automatic or a T-5 5 speed.

A little more "out there" but worth considering (due to smaller size and lighter weight) would be an aluminum V8 from a Range Rover. This was originally a Buick engine in the early 60s. Rover bought the design rights and slowly improved it over the years. These engines come in various sizes: 3.5, 3.9, and, I think, 4.5 litres. Lots of speed parts available for these engines out of Australia. I've seen several Range Rovers go for under $1000 at the local wholesale auction lately---nobody wants them when they have serious (read: expensive to fix) cosmetic issues, even if they run great. Unfortunately, there are no kits available for this swap, so you will have to fabricate all your own motor mounts, adapters etc.

The absolute ultimate would be a Ferrari 308/328/Mondial 8 DOHC aluminum V8, which would make the resulting car almost full-blooded Italian. Interesting to note that the Ferrari wheels would bolt right on too. However, coming up with the parts would be a major headache (buying a wreck is about the only way to go, and those are few and far between) and then there are the reliability/practicality issues you mentioned. Better stick with the cast-iron Ford.

I have a 90 780 turbo, and am thinking about converting it to N/A, M46 and 3.31 rear axle. Not looking for performance---comfort, style, reliability and gas mileage sounds like a good combination to me. However, since I've had this car for a while now, and have yet to get started on it, I might consider letting it go, if you are in the market for another one. Mine is definitely a project, but is far too nice to be considered a parts car.