I am just south of Nashville in Murfreesboro so it is flat here. I will look to upgrade to the Auto Gear transmission later but I can buy a rebuild M21 from a coworker right now for $500. An extra $1500 does not fit the build budget at this time. However, I will be purchasing the ring and pinion for the rear end though. Wouldn't the 3.08 be a solid option to provide performance and comfortable highway cruising?
The trouble is getting it going from a stop. For most street performance applications, a 10:1 final First gear ratio is usually considered optimal. anything less then 8 would be very hard on the clutch to get the car moving. Your final drive ratio is 6.78, a lot less. Mine is a M20 2.52 first gear and 3.36 rear gear. 1st gear Final drive ratio is 8.47. To me 3.36 is the lowest I would go and I would rather have a 3.55.
The recommendation for a Muncie m20 4 spd is to not go below 3.36 rear gear because of the 2.52 first gear. A m21 has a 2.20 first gear. 3.90 is the recommended rear gear for a m21.
With the set up you are looking at, you will be very unhappy and replacing clutches a lot with a m21 and 3.08 rear gear. This is a set up for failure.