I bored my 5.3L out from 96.01mm to 99mm, so in a sense I have a 346ci 5.7L iron block "LS1/LS6". 99mm bore, 92mm crank, stock rods. I would not have the machine shop bore any further than the sonic test allows, because not all 5.3L's are the same. I have read about sponsors going to a 3.905" bore immediately with the 5.3L, but after having my block sonic tested they found 3.898" (stock bore) was best because my #2 and #6 cylinders were thinner than the others.
I will say though, I built my 5.7L to prove a few things. It would have been cheaper right off the bat for me to pick up a low miles 6.0L and build that instead. The machine work ended up over $1100 for everything, and the pistons were another $300 something just for OEM replacement LS1 pistons from Speed Pro. You can surely find a 6.0L for under $800.