the 4k's are really nice cars. with quattro, it is a good platform for a rally car :twisted:
you could always install a 4 cylinder diesel engine. the 5 cylinders are good, but IMO, a 1.9TD or even 1.9TDI would be a better idea. there just isn't the same parts availability for the 5 cyl diesel engine...
over in Europe the 4k came with a 4 cylinder engine. the block should bolt right up to the trans as well, and buy the right brackets, or even just make your own.
Below is the 5 cylinder power graph:
it is actually just a 1.6 motor with an extra cylinder on it.
here is the 1.6 motor:
so as you can see, the power increase is almost relative to the extra cylinder. going the 1.9 route with some mods should easily beat the stock 5 cyl, but a modded 5 cyl could still do quite well. the main problem is having to buy an extra 2 head studs, valves, seals, etc. but at least the 2.4L diesel's metal head gasket will work on the 2.0TD 5 cyl engine.