The engine isnt completely useless.
You have a few options to play with, improving the air flow will definitely help and a remap will make the car run better.
In my opinion you've got a few options,
1.
DSG intake,
Uprated cams,
Miltek exhaust,
remap.
2.
Supercharge. Yes there is a supercharger you can get for the 2.0L 8v engine, gains will be significant but the kit is roughly £1000 and on top of that is the labour and a custom remap. Mk3 2.0L 8v engine owners can shed some light on the supercharger but if you use the search function and look for one of mine or rhyso or various other peoples posts theres some fantastic write-ups and links to other threads and forums.
3.
Engine conversion. Insurance will rocket, tax will stay the same but you'll then have the joys of a faster engine (probably best just to buy a 1.8 20vT) But saying that at some stage i'm going to be looking at a engine conversion because i dont want to get rid of my car lol a donor car would be your best bet for a conversion if possible

at the moment i'm going for option 1 but possibly an LPG conversion to get better MPG. Would love to be going for option 3 but £££ just says no haha