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My goal:To end up with a fun car better suited for the street than pure track. I'll do some DE's, but I wont try to race it competetively. ... If my current engine is worthy, Id obviously like to clean it up and keep it.
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OK - what about the current motor don't you like?
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I have only driven the car gingerly 3 or 4 times since I bought it so I have no comment on performance or feel.
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In order to really assess what you have and what you'd like to do, you're going to need to take it out and run it up to the redline a few times and see how it feels. Maybe try a DE or two before you pull the whole thing apart. Otherwise you're going to be spending a lot of money ($5000+) and time doing stuff that may not mean anything to you. Just because someone else says "Short Stroke 3.2's are the way to go" or "2.7RS's are the "sweetest engine"" doesn't mean a thing since those people won't be living with your car and the associated bills resulting from the rebuild.
Anyhow, some possible scenarios...
1) "Holy $hit! This car's performance scares me, I could hardly hold on!" -- Ok, Don't rebuild the motor for more HP, but rather go with something that is easier to live with or else skip the rebuild for now and spend the money on more DE's until your skills have grown to match the engine's capabilities.
2) "Man as soon as I got to 4000 RPM it started missing and was killing mesquetos for miles around with the smoke" -- Ok, it looks like a rebuild will be needed sooner rather then later. I'd recommend totaly up the expected bills for the required items as well as the "do it while your in there" items and compare it with your budget. If there is money left over, do some upgrades. Alternatively buy a larger engine, but keep in mind that there are few if any guarantees, so the 3.0 or 3.2 that you buy to drop in may be just as bad as what you pulled out. Remember that the seller is always selling for a reason.
3) "Yeah yeah", It pulls right to the rev limiter at 6500 RPM cleanly, but it really doesn't have the punch that I wanted from X,000 RPM on up." or... "It runs fine but it keeps running out of steam just before my next turn-in which forces me to put an extra shift in which is killing my times at my last DE", or whatever.
Now have have some specific issues that you can try to come up with a plan to address.
Remember, someone wiser then me once pointed out that...
"$peed is a function of money. How fa$t do you want to go?"