Chech the Tech section dude, there is plenty of info there.
A shortened R31 skyline diff is the go dude, well thats what most people up-grade to when the power becomes too much for the H165. Some choose Hiluxs diffs and others even go the ALMIGHTY ford 9in. There is plenty of bits available for the R31 diff as it is just a Borg Warner diff with 4 stud axles. So you could whack in a crappadoor or falcon LSD and there are a few ratios to choose from.
I see you are in townsville, a mate of mine at Stainless Customs is currently doing this exact conversion, once he finishes I can find out some details and let you know how it went. As for the brakes the R31 diff comes with disc brakes so all you will have to do is hook up the hydraulic lines and modify a handbrake set-up.
Engine wise is a personal thing. For my conversion (ONE DAY) I am going to put in the SR20DE cause I reccon there is allot more aftermarket parts at better priced compared to the CA18DET. Most people go the CA18DET cause its powerfull right from the word go, its also a bit lighter and some say its stronger. Just decide waht you want out of the engine and go from there.