Bob,
As far as engines go, either choice is fine. Just keep your prop clearance in mind. The stock gear will not provide "adequate" clearance with a 12" prop. That is my experiance with the taildragger configuration and the Saito 56. Switching to a taller gear made a world of difference. If you look at photo 82 in the instruction manual, you can see the prop doesn't have much clearance.
Alex,
Keep up the good work! Your color schemes look good. I think it's important to use bright contrasting colors when using dark blues. Maintaining orientation with dark colored airplanes can be tricky at times.

Some changes I made during contruction of my Mid-Star 40 included the following.

1. Swapped out the Sig pushrods for Sullivan composites. (As stated previously, the Sig pushrods expand and contract way too much.)
2. Installed dual aileron servos. (Not really necessary, just my preference)
3. Fuselage rudder hinge mod. (After framing up the fuse, I realized that cutting a rudder hinge slot where the plywood fuse halves meet would be a pain and also would not provide much surface area for the CA hinge to hold. My solution was to use a 1" wide sanding block with course paper to sand a 1/2 deep X 1" wide slot at the hinge location. I then glued a block of balsa in the slot and sanded it flush with the fuse sides. This allowed easy hinge slot cutting and plenty of surface area for the CA hinge. Nice and strong, especially if you use the stock tailwheel set-up.
I made a few other small changes but I've probably bored you all to death by now. Mark