Issues to consider when making a replacement gearbox choice -
How much torque do you plan to ultimately put through the thing?What is your budget?If a kit isn't available off the shelf, what is your personal skill level - i.e. are you proficient at precision fitting / machining so you can make your own adapter plate if necessary, or would you need to farm that work out to a shop?What's the spare parts availability like for the gearbox you choose?
A T5 conversion is going to be the least expensive and least hassle option, IMHO. For a 240, getting an ex-Holden VN - VS or EA Ford T5 and fitting the appropriate length input shaft (depending on the number of teeth, which I forget off the top of my head, but is written in the long T5 thread here on Oz Volvo along with part numbers,, measurements, etc) to fit the DeeWorks / Yoshifab kit is not as much hassle as other choices. That plate is drilled for both upright and slant configuration.
"Fox body" T5 parts? I'm old fashioned; I like part numbers, because with T5s, it's a bit like saying to a parts person that you want a LH headlight for a Volvo 240, there are many variations. It shouldn't be a problem getting T5 stuff ex-US if necessary, but being in Brisbane, you're not physically far** from Mal Wood Automotive, who is Mister Tremec for Australia. I'm in the process of getting a 'T5 Frankenbox' together, which is part BA Turbo, part EA, using the V8-type main case, gearset, cluster, and input shaft but having an EA-type extension housing, top plate, and shifter assembly, together with a cluster reinforcement plate for strength and longevity, so it will happily fit in my 142 16v+t project and should not fail. I also have an ex-EA 6-pot box swap planned for my B20B 144, which won't need to be as bulletproof.
Have you examined an AY6 physically? I've only seen pics online, but my observations tally with Spac's, i.e. the bellhousing appears to be integrated with the main case. It might be worth doing a personal inspection of a box with measuring tape in hand, either with a unit for sale on Gumtree etc or at a wreckers' yard.
One option not discussed here yet is the Tremec TR6060 box, which is essentially the OE version of the T56 Magnum. The T56 Magnum / 6060 is not the same box as a T56, however the T56 Magnum and the 6060 are essentially the same box, just with different shifter and mid-plate arrangements. The T56M / 6060 has the advantages of being a lot stronger than a T5 (even the 6 cylinder versions), of having good ratios to suit a short diff, an extra gear, and of being available from wreckers, etc, but I am not sure about the availability of suitable input shaft lengths to suit a conversion using an M45 bellhousing - AFAIK there's not as many input shaft sizes available for them as there are for the T5. It might be possible to use an old BW35 / BW55 bellhousing with an adapter plate to fit one (shorter than M46 face to face), but that comes down to having a box on hand to do the measurements, and if it's plausible, then having the skills and abilities for precision measurement and machining to make the plate. If I had those skills, and if I was not so far down the path with the Frankenbox T5, this swap would be one I'd seriously consider.
** Well, closer than me at least, and I'm ordering my T5 bits from Mal.