8mm Mauser is everything the 30/06 is and is sufficient for anything in North America short of the great bears. You are far better off buying a rifle already "sporterized" (stock modified, scope mounted, etc), than spending the money to modify a military rifle in original condition, i.e. spend money to reduce its value.
As for ammo, as suggested, Igman is the way to go for both target and hunting. I like close to the 200gr bullet weight for the 8mm.