I think that it is a good idea to stick with a 260 cam, and 350 cfm Holley or perhaps the 32/36DGAS Weber. The stock head is a restriction, but the cam will liberate lots of power and you'll love the way it behaves.
A 500 cfm is a 200+hp carb, and is too large for the hole in the log head. A 350 cfm may run out of gas at around 150 hp, but that's plenty. A cleaned up Holley/Weber or DGAS is a 140+ carb too.
Some people have found 500 and 350 cfm Holleys are touchy working under leadership from a long duration cam, and its safer to undercam a car in these situations.
If you really want extra grunt without giving in to the Argentine and Aussie 2v brigade, then go halfway...rebuild an imported 221 block from an SP or ME headed engine. It uses stock 200 mounts, and is only .660 inches taller. The front water pump housing is a little taller, but it will fit your 66. Easier than the 250, which doesn't mate up to the same gearbox. And all the bits are interchangable. The 221 is a good little engine with short 289-style conrods and a short stroke but longer than the 200.
Good breathing 2V heads are brilliant, but doesn't produce bag loads of low end torque for daily motoring. Going for more cubes is a good idea, but you'll find the 250 is a little bit rougher than the 200 and 221 engines. Same with the cam. It justs adds power, and the more you add the more low speed torque is lost. You cannot create , say , 20 % more top end power without loosing low end torque. The off idle to mid range zone will always suffer unless you run a Intec VCT 4.0 SOHC or DOHC Aussie six with variable cam timing.
If you don't mind a moderate loss in low-end power, get a lower diff ratio (higher numerically) and look to that 268H cam grind. Just remeber that it's easy to over cook the cam, and a big engine can handle over camming more than a smaller (200) capcity engine.