If I wanted to use this motor full time, is there an advantage over a later one than my original 69 motor?
I read this as asking if a later XK engine to your '69 one gives any advantage. Regrettably I have to say - Not Much !!
In 1969, the E-type was only a couple of years away from it getting the V12 engine. The 4.2 engine carried on for many, (too many !!), years in the saloons, but a crucial change was made by Jaguar in the 70s which was, frankly, a complete
disaster, (I had to suffer its consuquences in the late 80s).
Intended to "strengthen" the engine, (Ha Ha !!), the change involved the lengthening of the cylinder head studs so they screwed into the bottom of the engine block, instead of screwing into tapped holes in the top of the block, as per your original engine and how it had been since 1948.
This modification essentially ruined a fine engine by making it prone to cracking between the bores (1-2, 2-3, 4-5, and 5-6) and was not put right until certain mods were done to eliminate block cracking in the the 80s. Way, Way too late - Jaguar were almost bankrupt at that point.
The main problem was the Jaguar Car Company was run on an absolute shoe string. Even the machinery used to make the XK engine was secondhand
when it was introduced in 1948 in the XK120, and was in use until the 80s !! So the engineers could be aware of the correct solution to a problem, but there was no money for anything but a spatchcock.
Things were reasonably OK quality-wise until the 70s when Great Britain entered its decade of complete madness. Believe me, this is true; I was there at the time. Quality control and build quality plummeted under the British Leyland regime. Essentially the unions ran the whole country, (badly). Anyway, I digress.
Getting back to your question......
Remember that Jaguar won several Le Mans victories with basically the same engine as in your car, (3.8 rather than 4.2), but with one crucial difference, the valves on the racers were larger. These larger valves were eventually introduced to production cars in the XJ Series 3 saloons. So, if you want to improve power, you need to try and get hold of an XK Series 3 cylinder head. From that point you can start on all the tuning options to increase power. These involve camshafts, carbs (or fuel injection), etc etc. With a few minor items, the Series 3 head is backwardly compatible with your '69 4.2 engine block. Do check head depth for minimum value when buying as these heads could have been skimmed a few times. Of course, you can apply tuning to your existing head, but the brething will always be more restricted.
If you want a reliable plug-n-play interim engine with an auto box, the very latest XK engine you can get is best as it will have the final block mods. These will be from Series 3 saloons from about 1983 onwards. Keep the transmission, as it is the Borg-Warner 66, which is pretty reliable and long lived. However if you want a later box with more gears, you will need a new bellhousing. There are plenty of suppliers of this sort of thing on the internet, but they are not usually cheap. Other alternative is to find and engine and gearbox from a 60s saloon, but I suspect there are not many of these around now.
BTW, if you want to fit the V12, you will have to change an awful lot of stuff, even the front engine cage is different. A lot of mods were necessary to fit the V12. Of course, if you have the money..............