David,
        Your plans for upping the HP of your vanagon sound wise, productive
and safe!  I'm not an engineer but in my experience with racing german cars
and my constant quizzing of others more experienced than myself says that
your going to get the most and best increase in power from doing the heads.
Making an engine more efficient makes power and doing the heads makes it
more efficient.  I do understand that there is a point where you must
consider the limitations and/or setup of your fuel delivery system and how
it may restrict perfromance gained by the heads a bit.  However I think you
may have to go pretty far as far as porting before you begin having problems
or losing benefits. FRom talking to people about similar mods as you are
suggesting I'd say, with the heads done right, you will definitely be around
100HP (changing the cam may help as well, even in just power range and not
total power).

My 2cents,
Eric
'71 911E
'86 Westy
'91 Jetta
'56 Austin Healey