The 3rd gen might be easier to work on, and some parts can be cheaper. The 86 is only a few years off historic plates if this is not a daily driver. You could always drop an LS1 in that car.
But the LT1 cars come with better brakes and better manual transmissions. They also appear to have nicer interiors. But that is subjective. At 160k miles, you are rebuliding the damn car anyway. LOL
Neither of those cars should be much over $1000. All those miles, plan on eventually redoing a lot of things (suspension, etc).
I never owned a 4th gen car (past the one I am stripping).