I literally think about stupid projects like this all the time. I'm glad we have this support group to help addicts like me
Rz500 a, stock probably deliver 75 real horsepower ,to add performance/port/carbs on average.. just over 100 h.p. there's a few that have gone bumping close to 120 but very few, and likely just tune for good Dyno runs. A modified RZ 350 will run circles around an RV 500 the engines are 1/2 the weight, the bikes almost half the weight in race trim... I've ridden both, I like both but the capability of the rz350 with the big bore cylinders is far beyond what an RZ500 can be modified to achieve.... There's also a huge price disparity building the two machines all things being equal a tricked-out 500 and a chassis is a pretty nice toy, plenty of great examples out there I'm no expert but I know these bikes pretty darn well I've had them since they were new.
My "resto-mod" RD400 Stripped down to frame for a re-powder coat and basic refresh. Not a ton of work like the above...but my work New tail/seat/paint/clip-ons
This was mine, 79 Daytona 400. Had SCR modified DG Sunburst heads, on a old Spec 2 built engine. Came w rearsets, FFP pipes, Moto Carrrea millennium pipes, FZR600 from brake conversion, period clip ons, and a trimmed tail ! I sold this bike, as I only bought it as you see it for $1300.00...sold it 5 yrs ago... Thinking I'd always be able to find another. My biggest motorcycle regret! In these 5 years prices have gone really high, seems I can't touch a RD400 for under 4k and thats a basket case too. Bums me out! I don't care one bit about originality...I want a stripped down /modified RD400 76-79. ! Looks like a dream I'll never get to live out again.....I won't pay crazy $ for one, These bikes were always silly cheap if not free.....lol I'd pay a reasonable amount for a running project though...just not the collector prices everyone seems to want for one these days.