I disagree Rusty. This is what I do for a living, and with the extinction of leaded gas, hard exhaust seats are a must. I have seen iron heads from cars that are so bad, the head of the valve has burrowed below the chamber surface.
I always recommend hardened seats to my customer, but it is always his choice in the end. I get $96 to install 8 seats, and the cost of the seat itself, usually between $3 to $7. You will surpass that price in about a dozen fillups with lead substitute. Induction hardened heads can be tricky. How many valve jobs have been done before? How thick is the hardness? For $96 plus the seats, you don't have to worry about it going bad.
As far as the seat falling out, with a proper installation job, you have just as much chance of a failure as a replacement guide falling out, or a cylinder sleeve moving, or a pin bushing failing. They have been using seats in aluminium and diesel heads for decades, and I have only seen one failure in all my time doing this. A seat should have between 0.003" to 0.005" interference for an iron head, and 0.007" to 0.010" for an aluminium head. That is a hell of a lot more than a guide at about 0.0015" to 0.002".
As far as the heads, the 516 will bump compression, but has smaller ports like Rusty said. The 342 head has larger ports, and was based off of the 906 head, just with induction hardened exhaust seats. Use the 342 heads, and either run the seats like they are (with a valve job of course), or put the hard seats in.