If this ends up being a bad head gasket, I would like to update the head bolts to the '88 style bolts. Is this a do it yourself upgrade? Pull the old ones, drill and top, and install new ones?

Installing larger head studs are not necessary if all of the studs will hold 18 to 20 ft-lb if torque.  Do not attempt to install larger unless you have a mill.  the stud holes must be drilled and tapped absolutely square to the gasket surface.  We are having a large number of cylinders that we cannot fix the crooked stud mess that was created by owners and shops that were not properly equipped. 

We have had to throw a a lot of heads away that had the stud holes drilled so large that we cannot get the head centered over the bore.  Centering the head over the bore is critical when setting the squish and cutting the head for 0-rings.