I'd suspect the 7.5 driveshaft is plenty strong. I bought a beat to junk 85 regal that had a high revving built up 283 in it that was running the stock v6 driveshaft. It lived for years in that car before I got it for parts.
Plenty of guys with backyard engine swaps - 350s, 403s, 455s run those too, just with new joints.
If a car is going to be raced or driven hard a driveshaft loop is cheap security and worth putting in anyways.
I'd say start with that one, then if you want later get something better, maybe even an aluminum one from an fbody.
I know you said olds 350, but any other details/specs on the engine? Stock? Built high compression/modded? Some type of home brew turbo? A stock olds 350 is a big upgrade from a 3.8, but not exactly crazy horsepower to start worrying too much about exceeding the stock engineering