If it was me... and had the cash to burn.. how about a 328i motor. Lots more power and should fit.. dme change tho which may be difficult.
I spoke with the local wrecker about my car (320i) about performance etc.. he told me to not even bother with forced induction.. a much nicer and more progressive power gain could be made with the 2.5 or 2.8 motors. But that applies to the 6.
In your case with the 4.. forced induction may work quite well.
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