You "could" get away with a 35 engine, but you'd be happier getting new 40-46 engine.

As for the radio, you might want to look at the new 2.4 Ghz Spread Spectrum radios. They are a bit more pricey, but you have the advantage of never having frequency conflicts. Plus, they are radios you can use later on down the road as you get more planes
[link]http://2.4gigahertz.com/[/link]
[link]http://www.horizonhobby.com/Products/Default.aspx?ProdID=SPM2710[/link]

The Futaba is a litte bit less than the Spread Spektrum radio, but the Futaba doesn't come with servos. But that's not a huge deal as you can get standard servos for around ~$10-$15.

Hope this helps

Ken