Mate, i know a few people who are spending up to 15k on there MK2's doing all kinds of crazy stuff..... they are spending loads a cash (15k) on them and getting figures close to 150bhp out of a mk1 1.8t..... and yep im very jealous..... BUT!!! these are not there daily drives, they are weekend cars and thats it.... they have other cars such as mk4 gti or a mk5 gti to run around in
Im VERY jealous of them as id love to tune up a car and have a little pocket rocket, but the fact of the matter is i havent got the time, expertise, and most importantly the cash to do it.
You can read Golf and PVW anytime and see people the same as the above who have the dough to do it but then there are those who have only that car as the daily drive and you read the sacrifices they have made the lifts they have to scrounge and the stress they go through to do what you are asking..... My advice would be if you want a turbo.... buy a mk4 Turbo for about 5k and get it re-mapped... in the long run you have brought a tried and tested Turbo'd car done by VW that will be newer ready to go and will end up probably costing you alot less..... than putting a 1.8t in your mk3....!
Or buy a mk3 VR6 for 3.5k that will give you the extra power and most of your mods will swap straight over!!!
anyways that just my 2p's worth