Considering building a 997.1 S for PCA club racing ( a good deal more stress than DE"ing). Any experience with engine/gearbox durability in that environment? Any durability improvements over the 996 3.4 which was marginal? Might a GT3 be cheaper in the long run?

 

First you need to review what class in what organization will such car fit, what will be to field there and if such car will be competitive or not.
Any Porsche racer will demand considerable budget and new gearboxes and new engines/rebuilds should be accounted for. From what I heard M96 properly built ($10k rebuild job) lasts about of 100-120 racing hour if you lucky.

In my opinion cheapest way to get competitive racing porsche car is to buy 996 cup car for $65k-$85k depending on condition and then swallow the price of support and drivetrain rebuilds/refreshes.
Research this topic, PM mobonic who went all the way to build baby cup from S car just to buy a cup car finally.

 

Answering directly - skip 997.1 car as a donor. Do not do it. If your region has a lot of folks who run 996 spec cars - speak with them and decide if you want buy/build one.
Or see other options like NASA gts3 class where you can run much less budget hungry E39/E46 based bmw car.