You need to open the head up now, this is now the restrictive part of the engine set up now. I have a similar engine - a C&R 1.9 but this has had a Kent Cam and flowed head, inlet mainfold and exhaust manifold fitting and i can confirm that its a flyer. My last car (I still have it but Girlf drives now with another engine), was rolling roaded at Stealth with 120 bhp and all i had on that was K&N and exhaust and that was a PB.
The engine in my car has done about 60000 miles and is nice and loose now, it smoked my mates 16v of roundabouts the other week and i am really happy with it. I was planning to get a 16v when i got this one as i wanted the engine for my Mk1 eventually, but this 1.9 will be a lot easier to install and its going to make a real flyer with a 1.6 Mk1 box.
Just remember, you wont have a smooth idle with a cam upgrade.