It's the second one - 1 gallon of oil for every 10 gallons of gasoline. Also, a 10:1 is way too low for breaking in these engines. Most people recommend that you should use a 16:1 of unsynthethic oil during break in and 25:1 of full synthetic thereafter.
One part i know you will need is the special u-bolt and mounting plate for the front mount because I assume the Huffy you have in mind is a cruiser and had a wider diameter down bar. I think pretty much all kits have that though. Another thing to lookout for is the wording "machine balanced crankshaft" or any other language that indicates that the crankshaft is balanced and is a single piece. If you stay away from the cheapest kits, you will avoid getting an engine with the older unbalanced two piece shaft. I personally recommend paying a little extra and buying a kit from someone who builds HT engines themselves. You usually will get better parts in the engine and will not have to worry about assembly errors. I have bought from Dax -
http://thatsdax.com/. I also hear this guy is really good to
http://ozarkcruisers.com/
As for upgrading, I recommend buying a rear sprocket adapter for your first build. It is so much easier to true than the rag joint and you don't have to worry about worrying your spokes.