Upgrade recommendations
 

I've got a tired old 3.0L SC engine with PMO 40s and a hankerin' for more power. I'd like to see 200TQ/200HP at the wheels, which I feel is a reasonable ask. Do you think I could get there with just 3.2 P&C and cams or would twin plugs / EFI be needed?

For a goal like this, would you go a different direction instead?

There are three data sets that need to be answered before "reasonable" recommendations can be made.
Application: what chassis?
How hard are you going to flog it?
Budget: How much faster can you afford?

Appplication: 1981 Porsche 911 SC, currently has a stock 3.0L w/ PMO 40s.
Flogging: 100% street car. Low end torque is king for me - I'm seldom at high RPM because I don't like police attention.
Budget: That's what I'm trying to figure out. Do I set the chassis up for water cooling and use the 260HP flat six I've got sitting on an engine stand right now, or is it cheaper to get 200HP out of the air cooled setup, which I adore for its simplicity?

If 200 hp power is the goal, you can do that fairly cost effectively.
I would build a carbureted, 9.5:1 , 3.0, with DC 40 cams and a clean exhaust.
By clean exhaust I mean either headers if you don't need heat or early 911 style heater boxes. SSIs are fancy but for your requirements Dansk stock heater box replacements will handle the challenge. Sport muffler based on the noise lever that suits your sensibilities. Some sort of distributor tuning will enhance your enjoyment.
You have small port heads so I would port them to 38mm. These will work well with Mod "S" cams.
If your cylinders are Mahle and in good shape you can freshen the cross hatching and install CP pistons. General rules of rebuilding apply but this formula gets you what you're looking for or more (220-235hp) as cost effective as possible.