This ambition strikes me as slightly ludacris.
If you manage to "explode" that much power out 1.6 liters of displacement... using diesel... i don't know if it would last 1/4 mile
Im making like 25% of the power to beat those cars and i've put a significant amount of money (but mostly time) into mine.
Your shop giving you a $1000 quote to beat anything on the street is basically a slap in the face and their saying "yeah ... give us your money... we'll .... change your filters!!! and you'll be the fastest car on the street! a thousand bucks please."
You can find threads of people making 200hp on here and the amount of work is rediculous. ceramic pistons, aaz heads ported of course, giles pump and injectors, intercooler, t3/t4 turbo hybrid, build trannies, suspension, all kinds of cooling, egt set ups, custom downpipes and exhaust, not to mentioin some kind of LPG injection (i know it doesnt work the greatest on IDI but it is still a power enhancement in my opinion)
Like Jim said, there is no replacement for displacement. You can come darn close but those bigger engines will keep climbing the speedo. I built a '73 nova with a 400 in it. no mods other than over bore. just a holley carb, edelbrock manifold and open headers, with a 3:7:3 and it did 12 seconds... it was stripped bare of course but engine wise all it was was a big empty space that had gas sprayed into it and it blew up big enough to go extremely fast and couldn't drive anywhere but in a straight line of course.
You can make yours more
FUN to drive and a lot cooler

with that kind of money
and that's better than being a few tenths of a second seconds faster on the light i think. and you'll burn 1/20th the fuel!!! You'll appreciate how much less you burn once you get everything tuned up nicely.