"If you are going to proceed, you might want to look at installing the actual oil/water heat exchanger directly on the block where it is on the 1986 and earlier 700 series turbos. You could then mount the PermaCool uniut directly on top of it and bring the hoses forward."

That is what I was thinking of except using an air/oil cooler, since keeping the water/oil cooler would involve longer hoses to the water lines. I wonder if I could rig metal tubing to run from the water cooler mounted directly to the block? I am probably better off with my original idea of using the later style oil cooler lines modified to run from the filter adapter to the filter mount (instead of the lines original purpose of going from the switched adapter to the oil cooler, the adapter I have is not thermostatically switched).

The first step is to get that head off, resurface it, (if needed) and clean up everything!!!