Anyways...yes...I'd grab the L26...you've just gotta compinsate for the higher compression...meaning headers are a must...and while your blower is off if you haven't done it I'd port it and the TB too. I'd start on a stock sized pulley and go down from there but I don't see any issue with you running a 3.5" with a cam and headers.
im running a 3.4 on a top swap with an xp and headers, with 19* of timing. i dont know much about the s1x though.