I'm seeing more and more type 1 powered buses around. Type 4 engines are getting more expensive every day and the top of the line versions (such as a Jake Raby built engine) can cost more than a good bus is worth.
At Bug-A-Paluza this year, we probably had 6 or 7 late bays with type 1 engines. Some had the fiberglass adaptor for the engine bay, some had a bay modification like the one I have in Homer (all the sheet metal is cut out from between the frame rails and a flat sheet rivited in with a type 1 engine bay shape cut out) and a couple just left the big gap opened around the engine. The best way is to use the fiberglass piece. Cutting out the sheet metal and putting a flat piece in is cheaper, but kind'a makes it hard to go back a type 4 later. Leaving the big gap around the engine is asking for it run hot.
I'd say the determining factor is the transaxle. If you can find a good one cheap, it's worth buying the fiberglass piece and throwing a type 1 in it. Finding a good late bay tranny cheap isn't easy to do . . . every now and then you can find a complete bus with no engine and rusted beyond hope but still sporting a good transaxle and get the whole thing cheap . . . but like bugnut said, you gotta beat the rail buggy guys to it.