I upgraded my 82 westy diesel to a 1.9L na and am happy. I considered going
to a gas motor I-4,Suburu,GM V6,etc. but the out of reach for me TDI was most
promising. Suburu is coming out with a new 2.5L flat six that is supposed to
be about as compact as the old 4. That sounds interesting but won't be in
wrcking yards for a few more years. All things considered if  I had a WBX and
some good advice on improvements like counterweighted cranks, cams, ceramic
coatings etc. I would probably go that way. I worked for a Jaguar restoration
shop once upon a time and there were a number of chevy transplants that made
perfect sense except for killing resale value.