What you need to find out is what would a mk1 be worth with a full respray, 1.6 engine, rear disk conversions with a half decent interior and see if you can do what you want to do to it for less than that, if so then do it. I think that being a mechanic yourself is probably half the battle here.
When you say 1.6 do you mean a 1.6 carbed or 1.6 injection from an early mk1 ? As a rough guide I reckon a well resprayed mk1 with decent alloys, decent engine (1.6i), decent interior would fetch about 3.5k, give or take a few hundred either way.