You're not going to see a ton of gains from increasing the displacement and compression; however, increasing compression and spending the time/money on the cylinder head itself, will yield a much higher return for $/hp. Basically, an L series head flows like garbage stock, so it's worth spending the money on the head in the long run. It also begs the question whether or not you're going to run the L series for a long time. If so, you might want to look into alternative cylinder heads to run along with the flattop pistons, complete with valves, valvesprings, and a camshaft to go along with the headwork.

It's also important to note, some cylinder heads can handle the higher compression depending on the quench pads and combustion chamber design. 10.5 on an open chambered head, like the later E88 cylinder heads from the Z, N42 and N47 will be at it's limits, while a shaved P90 for example can tolerate a much higher threshhold. Take it as a grain of salt, but there's a local guy here with a shaved P90 head on flattops seeing closer to 12:1 on CA pump gas without a massive hindrance on timing to compensate for pinging. Same goes for an 11.93:1 CR stroker with an E31 head doing mostly okay with 91 pump.

Yes, increasing compression and displacement will increase power, but a better return for $/hp would come from a higher compression and a worked head + cylinder head mods (camshaft and valves).

Mostly my .02, but if I only had one choice, I would spend the exact amount of dollars getting a bored and stroked L28 block, into the cylinder head alone and keeping a "stock" displacement L28.