Absotlutely! Our stock combustion chambers if mamory serves me correct is around 63-64cc's. Before any porting and polishing is done, the Combustion chambers are filled in some. For instance, mine were filled to make it 58.5 - 59cc's. This effectively increases your compression ratio. Mine went from the stock 10.25:1 to 11.5:1 by doing this. The more you compress something, the bigger it explodes when it is triggered. Then they install larger valves with stronger (titamium) springs, retainers and usually go with chromoly pushrods in favor of the stamped steel factory ones. Then a three angle valve job is done as well as shaping and then porting and polishing the combustion chamber to yield/maintain proper flow, tumble and spin charactoristics of the LS1's already awesome chamber. THey then continue to port the intake ports and exhuast ports to remove the rough casting. The secret to a lot of the LS1's head wizardry comes from the tall cathedral style intake ports and the excellent exhaust ports. When you combine all these factors together, one can easily add roughly 50hp at the rear wheels.
Add a cam to the mix with higher lift, longer duration will net even greater results.
To put it in perspective, with just bolt ons, I dyno'ed 318.1 rwhp. After heads, cam, headers, LS6 intake, and proper tuning, I'm now over 400rwhp and my setup is a conservative one compared to what's available out there today. So I gained nearly 85 rear wheel HP by doing what I did and about 120 rear wheel HP from my bone stock dyno of 283rwhp.
As to having $2k laying around and what to do with it? Let me ask, what do you want out of the car? Make a plan. Do you want on tap power 24/7? This will also lead to higher fuel consumption as you need to feed the beast 24/7. If so, Heads/Cam is the route I would go and $2k is a small price to pay for what you get in return. Or do you want power only when needed and in the remainder of the time drives just like stock and uses no more fuel than stock? If this is the case, I'd save some more and go with a supercharger or turbo setup. Like I said, make a plan and do all your research BEFORE getting into it. It'll save money and headaches in the long run.
One thing to note though is that if you do any of these things, plan to allocate more than $2k. With any of these setups, you need to improve the other systems of the car such as fuel delivery, spark delivery, exhaust scavenging (heads and cam are pointless if your exhaust is still a bottleneck), and tuning (That's a biggy!). Then factor in things you WILL break. Since you're going M6, allocate at least another $500 - 700 for clutch and hydraulic system improvements as with that level of power, the factory one will wave bye-bye real fast. Our T56 is a strong unit, but you're on the edge of it's capacity and these things (especially the newer Tremec units) are known for bad synchro's (primarily the 3rd gear cluster) and other assorted problems. Then there's the rear end. Thankfully, this GTO is blessed with a Dana rear end that is surmountably stronger than that in my F-Body. But even still, laying significant levels of power on it, will shorten it's life dramatically and even more so if you launch it hard and often.
By the way, I chose GTP heads and cam from Craig Gallant down in Houston. He always had strong LT1 cars, then a few of use with the LS1 back in 97 and 98 when it was new netted unheard of numbers with his stuff then. Like I said above, soo much is out there now that you really need to do your homework before just dumping the cash.
I will post pictures of my heads so you can see some of the handiwork Craig did. All his stuff is hand done. The CNC stuff is machine done (majority of the time anyway).