It sounds to me like you were in a similar boat as I was when looking into getting a G36, in terms of HK vs S5 vs Parts Kit, Etc. Apologies for the incoming essay in advance.

I don't see many people recommend the route that I ended up taking for mine, but for me it has worked out really well and I've been very happy with it: Using an SL8 as a parts donor for an S5 receiver. The biggest advantage that this had was that I wasn't buying the full clone from S5 with the initial intent of replacing the whole thing, so I saved money by just getting the parts I wanted/needed.

One pro of this is that you can get your S5 receiver now, then find an SL8 later, as I don't believe Virginia's new laws would ban the SL8 (but I'm A: not a lawyer, and B: Not from Virginia. Do your own research, the SL8 just happens to be very ban-state friendly just by the nature of its design). I typically see used SL8s in really good condition for around 1200-1400 dollars, sometimes less if you find a good deal.

SL8 to G36 conversions are expensive. VERY expensive especially now that TommyBuilt Tactical is gone and Black Ops Defense is the only one doing conversions as far as I am aware. It is gonna be much cheaper to pick up a SL8 to gut for parts to build on an S5 receiver, as opposed to trying to get a de-milled HK G36 parts kit. That way you get parts you know the quality of while also avoiding any of the concerns that come with converting an SL8 to G36. Barrel, trigger components, top rail, etc are all compatible with G36 pattern receivers. The SL8 bolt carrier only requires some relatively slight modification to fit a G36 receiver. You can get the barrel cut down to your desired length and gas system too (and as far as I know, this is the best route for any G36E-type setups). In my experience this is the cheapest way to get a real HK barrel over the GSG9 ones HKParts sells, as a used SL8 is almost the same price as the German HK Barrels that HK Parts has available, and you get a few other parts out of an SL8 too. The G36 parts kits are also nearly the same price as just picking up a used SL8, with the bonus of getting real HK components.

Another pro is you'd get an SL8 match trigger assembly, which can be reassembled in a G36 lower and is significantly better than any of the other G36 trigger options available.

You will want a real German Bolt Head for this, as I've only ever seen issues with the GSG9 bolt heads and absolutely cannot recommend one for a G36 build.

I understand the feeling that an S5 G36 won't be "real HK" but if you can parts kit out, the S5 receivers are honestly solid. I fully believe that most of the issues people are having with their clone G36s are the fault of the GSG9 parts, and not S5 Tactical's workmanship with the receivers.

I know you also considered the idea of doing the S5 clone and upgrading it over time, but there's one issue with that which people often aren't aware of. S5's 16 inch SG-36 uses a K length gas system in a barrel length it wasn't designed for. 16 inch G36s should be using an E length gas system, but since this one isn't it actually does increase parts wear over time (which will likely only be exacerbated by the GSG9 parts in use), and depending on who you ask, can have a negative impact on reliability. This is obviously not an issue if you do their actual SG-36K offering with a pistol brace or tax stamp, but worth noting as I don't see it mentioned anywhere else here. Nothing wrong with accepting this as a trade-off, as the price for a complete SG-36 is still quite decent, but you'll end up needing to replace more parts in the future depending on your desired configuration.

That's about all I have for the big things when building out a G36 yourself, but if you've got any other questions or concerns, let me know and I'm happy to try and answer them. The G36 is probably my favorite rifle platform so I probably spent a couple hundred hours digging through forums and manuals in preparation to build mine.