No point modifying the KR, 2 litre conversion is better and far cheaper. You need a 2 litre 16v bottom end: The 9A is a short block from the passat/corrado. The 6A is a short block from Audi 80s etc - the only difference between the 9A and 6A is that the 6A is mounted longitundinally so you have to change the sump and oil pump over to fit it in a vw; as you will most likey replace the oil pump and can use the kr sump this is hardly a problem. The 6As are generally cheaper than the 9A as more plentiful and less sought after. The other engine is the ABF from the mk3 golf and equivalent Seat engines as mentioned. These are long blocks though, so need additional clearence on bonnet and downpipes aren't a straight fit; I think there is one 4-1 manifold on the market that is designed for the abf conversion mind, though not certain.
You can bolt the kr head to any of these 2 litre bottom ends, using kr cams etc and retaining all k-jet management. This should give you 150-160 bhp. With proper rebuild, balancing etc, high lift cams, head work and a proper set up then you should see 180bhp+. Then when you get bored of that you can turbo it
