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4kcsq/VWqs Engine grid

At the risk of ansking too many questions at once...here goes.
On top of due suspension mods, I will ALSO have to make major
overhaul to engine also very soon.  (We don't just get rid of cars
here do we?)
(1)  Should I consider swapping out the original engine for something
else?  Does anyone have an engine grid which would tell me which
engines may fit this setup?
(2)  If I should just stick with original, what would be the ULTIMATE
upgrade available to these 5 cylinder's.  I.E. is this an engine I
could expect increases of performance in?  Stock 115hp...how can I
boost this?
Basically I'm looking at putting $$$$$ into this thing, so throw any
suggestions out there (And if I see any 5.0L references.......L__]_O

86.5 VW 
98 A4tqw -OR- 99 VW Pst Syn