Travis,
I am in process of restoring a car that used to belong to my father. He was not the original owner (that would have been a neat trick seeing as even he was only 10 years old when this car was built), so I think you have something really special, well beyond what I have. Although my car was not nearly as bad as yours, the jury is still out until the car is completely done whether or not it made financial sense to restore it vs. buying one that is done. Since I bought the car nearly 20 years ago when they were still mostly worthless and found a very reasonable restoration shop, it might actually be close...but still probably not. For you, I don't think so even if you do a lot of the work yourself.
Family history adds a lot of value to the car in my opinion. It was my Dad's car, now it is my car, and someday it will be my daughter's car.
I understand the financial pain of trying to put a car like that back together. However...I agree with drambuie, if the only thing that's the way it was when your Dad owned it is the VIN tag, what's the point?
I would be more inclined to try to put the chassis and body back together from original style parts and take liberties on the drivetrain. I feel that stuff could be more easily undone in the future if things change for you financially. I would also be more inclined to put an early American V8 drivetrain in it rather than an MG drivetrain. Why? Because someone would have actually done that back in the day, no one would have transplanted an MG drivetrain IMO.
Later,
Walt
p.s. when I say "early American V8", I'm thinking an OHV engine like a Fairlane V8 or 283 Chevrolet, not a flathead.