I'm replacing the junk J heads and doing a piston swap chasing higher compression than the stock 8.5:1 from 1973.

When I swap the heads from J to C heads using Felpro .042" head gaskets and about .004" off the heads, is that going to upset the lifter/ pushrod/ rocker arm clearances, or should the hydraulic lifters take up the slack?

 

Given the information you stated, the lifters should be able to accommodate this difference/slack.

Anything else going on that you didn't mention? Like machining the deck of the block?

You really should measure this. You'll need a checking push rod and be able to measure the difference to be sure.