Jay said it best...there is nothing wrong with a 1966 352 block from a mechanical standpoint.
If your literal block has issues unique to its condition that is something with that block, not with the 352 block in general.
After sonic checking the cylinders for wall thickness you can then determine, with useful accuracy, how much bore you can deal with on that particular block.
Because the 352 started life at 4.00" bore, and 3.50" stroke, you have some great piston and crankshaft options to choose from that won't cost you huge $$ (relative these days I know)
You may even find some already excellent parts that were removed as someone else made a bigger engine from their already good running engine.
I don't know what you are doing with this engine but one thing I find fun with the 352 is the short stroke.
If you are making a fun cruiser/toy/hot rod that is not really dependent on actual power to win races and such you can cam the heck out of a 352, install good rods, and let it spin to some fun rpm.
It will sound really awesome as you idle around with the radical cam, and it will let you run through the gears with its rpm ability.
Yes, you can make more power with other combinations, but this is just one possible fun result when building a 352...They work awesome in a NASCAR fake because they look the part, and they won't break the bank building it like an honest 427 would.
Concerning the engine builder/machinist...my gut says get far away from that shop specifically because his mind is made up rather than simply working the mechanical/physical problem of machining the block to work properly.
He also does not know FE's, based on what you said, and this can have a detrimental result when building an FE engine.
