E30 all the way and im not just saying that cause i drive one. Stock m20's are great motors and run for ever and still get 20-25mpg city and near 30hwy. If your looking at e30's highly recommend trying to find a late model 325. the early model 325e and 325es have econo 2.7 motor really low reving. late model 325i and 325is have 2.5 with a way better head. "revs higher"
The 318 e30's with the m42 engine are actually great little motors i hear from alot of guys they love boost and will handle about 400whp with supporting mods same with a m20.
e30 has alot more going for it, Performance wise in all aspects...Drift,auto-x, or drag.
Lost of Engine swaps you can do if wanting to mod to that extent.

Lt1's are junk imo They really don't make that much power maybe 330hp at the flywheel and 280-290 ish at the wheel with basic bolt ons and a tune. And really only thing going for it would be going in a straight line.
Not sure what your looking to do as far as mods and plans for the car.