If you drop a 350 in and then drive in exactly the same way you do now you MIGHT get one or two extra miles to the gallon.NVRover said:
More so if your existing engine is tired and the new v8 is in better condition.
However if you use the extra power you won't save a penny.
And you may break some transmission parts (more likely the higher the mileage they already have).
Put a tdi in and you could get an extra 10-15mpg.
Given that either of these options will set you back at least $3k (that buys a lot of petrol), why not rebuild the existing engine?