The late model 350s are externally balanced too. I put a GMPP flywheel on my ZZ3 crate motor and I noticed that there was a very large counterweight cast into the back of the flywheel.
Seakane, yes, you can use the bigger flywheel/clutch on the 327 if you have the proper bellhousing. However, I wouldn't do it unless you have a problem burning out clutches. The heavier flywheel will take away some of the engine's "revability".
[This message has been edited by gheatly (edited 11-04-2002).]