An LS conversion would not save several hundred lbs as both the Nissan and LS engines use aluminum heads. Only the Nissan block is iron. LS blocks can be had in either aluminum or iron. I have never heard of iron LS heads (maybe some of the LS Vortec engines used them) but who would want iron heads anyway?
Taking weight off of the front end of a Z32 can only be good. You would not necessarily have to use coil-overs for a lighter engine. Lower rate springs would work.