Hey dude,
Loving the Red Rocker cover, was it painted or Powder Coated?
RE: Water Pipe looks good, albeit a major hassle it sounds like? Mine appears to just be a long hose.
I think the approach of focusing on the engine bay first, then interior, brakes, suspension and so forth is a good way to tackle restoration.
In terms of engine bay colour, I'm not usually a huge fan of different engine bay colours to exterior colour. However that shade of grey would look good with the orange exterior (depends on the shade of orange).
I also actually like what this guy did on Jay Leno's garage. (GM Spatter Paint)
Your engine bay is going to look great, but you're gonna hate me, cause I think it would look even better with the spark plug wires re-routed lol..
I also dig the clear PVC hose for crank case ventilation. (seen at top of pic there).