It's very interesting that you have posted thi topic and almost scarey as well because i have been thinking along these same exact lines for a while now.
I am very impressed with the LT1 in a Fiero but i too would rather not notch or have the frame notched. One of the things that makes the LT1 a nice motor in a Fiero is the roller cam which revs up much nicer then a similar flat hyd. would. The L98 is a logical alternative because you get the roller cam and don't need to notch the frame. There's also something that appeals to me about using an engine that was designed in the 80s in the Fiero, also made in the 80's, too.
Thing about the L98 is that the original TPI injection was really designed for the 305 which means that it starts to run out of breath in the upper rpms unless you add some aftermarket parts and/or porting. In fact, the TPI runs out of breath in pretty much the same areas as the Fieros V6 does. THe TPI was designed for low end torque, sound familiar?
The TPI, unlike the original Fiero intakes, has a huge ammount of aftermarket support though thanks to all the F-body and Vettes that they came in so their short comings can be easily overcome. There are siamesed runners, bigger throttle bodies, ported lower intakes, headers, and much more available for these motors that can really add power to the L98. I'd suggest adding the runners, bigger t-body, headers, and an adjustable regulator to your set up. This will wake your L98 up in the upper rpms which you'll hit easily with any of Fieros low geared manual trannies. Interesting side note; according to SLP, an adjustable fuel pressure regulator can add power on a completely stock engine. My big point here is that the L98 can easily be brought up to and past the LT1s stock power level with not to much work.
The head issue; The aluminum vette heads are easily obtained from many sources in the aftermarket so i wouldn't worry about trying to get an engine with them. Personally, i'd get a set seperately and then have some porting done on them which will also really add some nice power to the L98. Bowl porting followed by a good multi angle valve job on these can easily add 15 HP. Edelbrock also makes aluminum L98 heads which are stronger right out of the box then the stock vette aluminum heads would be.
There are also cams, roller rock arms, and even superchargers available for this engine. 
In my personal opinion, the L98 is a better choice then an LM1. You would most likely be able to get an LM1 for less but it does not have the roller cam and, with the restrictive TPI intake on it the LM1 doesn't really make that 260HP that it's listed at. That 260 HP rating is made with headers and a good 4-barrel intake which are superior in flow to the stock TPI unit. If you add some of the things i talked about above, then you will easily hit that 260HP level with an LM1 but, without that stuff (headers, siamesed runners, bigger t-body), you'll probably be putting out about the same HP as a stock L98 with an LM1 so it makes sense to go for the roller cam engine in the first place. Obviously i have no hard evidence this is true but i did read that the LM1s HP figure was obtained with headers and a good intake so it makes sense that this is true if you think about it. Any Vette owner that's driven an L98 with a 6-speed can tell you after 4500 rpms the engines power starts falling off much in the same way the Fieros V6 does. This isn't as evident in the f-bodies because they were only offered with the autos when equipped with the L98. Someone will probably come in here and try to argue that there were some f-bodies that snuck out with a manual and an L98 but, according to GM, this was not available so please no flames on that one.
We're definitely thinking along the same lines.
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Activities Director N.I.F.E.
www.fierofocus.com
Personally I'm hoping to find out some successful details about Archie's Intake swap: 
