HINT: Make certain you use only the Volvo OEM head gasket, failures have occurred even with good quality Elring versions or equivalent, unfortunately, one does not want to do it twice! Also insure your injectors are flowing nicely and the fuel system is up to snuff, another fairly common issue is exhaust valve failure due to either excess heat from carbon deposits or sometimes a lean condition in one cylinder over time.So when you have the head done get the Volvo OEM valve seals, trust me, no other version lasts nearly as long or controls oil seepage. It is worth spending that extra amount or deal with problems down the road. Check out Swedespeed or Matthews where there is more information on the FWD Volvos.
Insure that the PCV system is also in tip top condition, remove the oil separator box in front and insure there is no blockage in the passage going into the crankcase area, another known trouble area. If the rear main seal has not been done you might want to entertain the idea of replacing it with higher mileage or age. OEM spark plugs are also recommended or equivalent and it might be that there are some aftermarket performance wires available but those white blocks seem to run best with the original Volvo Bougicord. Never skimp on the coolant or ignition systems ( or PCV ) and use only OEM. Those engines use a HOAT formula antifreeze, so either the Volvo blue, Zerex G48, or I understand that BMW uses a similar coolant formula, your engine will thank you. And needless to say, synthetic oil with Volvo or Mann filters. These engines are great but finiky and need to be looked after more so than a red block. They are nice though when everything works!
Also, check your heater core if you already have not, access panel in front of the center console is easy to remove and the core itself quite simple to do, if you see the plastic end tank is a dark brown color I would definitely change it. Swedish Auto Parts sells a very good quality one for 30.00 that is very popular.
Also, a good anaerobic sealant is required when putting the upper cover back on. Plenty of little details to always be aware of - I assume for peace of mind you might consider new tensioner, pulleys and water pump when you change the timing belt, peace of mind when dealing with an interference engine that one is investing time and money into.
Nice part about 1998 model year is it still used a standard throttle cable and single coil - 99+ used an ETM, coil packs, VVT was introduced etc. And of course if an automatic flush it and put some synthetic in there. You could also ditch the air pump under the battery , there is a simple ecu mod to make it think the pump is still in the system, one less thing to concern oneself with. The joke is that the FWD cars were built around the CEL ( Check Engine Light ), so if it is not throwing any codes at you that is always a plus, often they can be simple things that can be ignored.
Edit: If you love the car and want to have fun with it great, but due to that antiquated Volvo designed AWD system I would suggest getting either a 1996 or 1997 850R or a 1998/99 T5, very similar output to the V70R, FWD only so less complicated and costly, the only real downside is finding one, especially a wagon. Had a '98 T5, very nice car and kind of regret selling it as there are so few to be found in nice condition. Just a suggestion before you drop your money into the V70R, but then if you need encouragement head over to Swedespeed, they love the R and T5s over there and will welcome you with open arms. Some interesting projects involving others bringing theirs back from neglect etc.