You'll hate this answer, but most of the posts you see on this forum are ... what bigger engine fits in my car ...
My thoughts, get an insurance quote on a GTi and see if its going to cost you much more, because once you get the 1600, you'll only want more power 6 months down the line.
Infact, skip the middle and just fit the ABF

I can't believe a workshop didn't measure the head to see if it had been skimmed before though? If you really want to keep the 1.3, you can always machine the pistons down a fraction to stop the interferance?