Originally Posted by bedheadben
Edit again: Also, if I want to stay fully street legal, isn't the BEGi S3 worth the extra cash?
I'm gonna throw a few modifier ideas out there and build on what others have already laid out.
Since this is a DD, and a California car, I'd consider cutting back a bit on the engine itself, and spending a bit more on the turbo system and a few other bits. You don't need a $6,500 "built" motor to run street tire levels of power. Spend a little more money on the base vehicle itself and get something clean and nice. Basically anything '90 to '95, with a preference for '94-'95 so you'll already have the larger diff. So long as the motor isn't smoking and blows consistent numbers on a compression test, leave it alone.
Spend the money on the turbo system. Get a Bell S1 thru S3 (your choice) with the full BEGi fuel system, so that you get the CARB sticker. Put it together and run it that way. Also get yourself a decent clutch and an Enthuza exhaust. And a wideband O2 sensor.
Also, set aside $2,000 to $2,500 of the money you didn't spend on the engine for your suspension. Springs, shocks, bumpstops, front swaybar, and all the little bits. Plus a set of 15x7 wheels and some RE-01R tires. In fact, do this before you go turbo.
If you wish, you may decide down the road to go with better engine management such as a Megasquirt. And if you blow up the motor, then you can make a choice to either buy another cheap used one and stick it in, or spend the money on the big fancy "built" engine. But truthfully, few of us here have them.