Great discussion guys... As far as the absolute HP numbers needed to set a new record in this class - I think that 150 HP (from a 1.5L engine) would be on the high side of what's needed. In fact, I would feel very good if I could see numbers between 125-150 HP at the wheels, spinning the engine somewhere in the 5,000 rpm neighborhood. This will be tested by running on a chassis dyno.
Some people seem to think that it should be very easy to make this kind of power from a 1.5L VW diesel. I'm not so confident, that's why I am interested in taking every advantage in building an engine, while trying to keep the cost down. Keeping the cost down, to me, means using as many factory VW parts as possible. Custom pistons, custom rods, custom cranks, etc. are all cost prohibitive. A creative combination of factory parts is within the budget, as long as I can source the parts.
There is no doubt that the 1.9 head will flow better than the 1.5 or 1.6 heads. I can run any turbo that I want, which should help with the EGT's and the ability to push a lot of air through the head at elevated rpms. Low RPM drive-ability is not a concern. The ability to get the engine started is important, however.
The way this effort will work is that the engine will be started, warmed up (even if it's very smoky), brought to the start line, then when the official starter waves me onto the course, the engine will basically be run at WOT for 2-3 minutes straight. If all goes well, and the vehicle runs more than 105 mph through a measured mile, the vehicle will be impounded overnight, and another attempt will be made to "back up" the record on the next day.
There will be an insulated tank (basically a cooler) in the bed of the truck, full of icewater, which will circulate through the intercooler, and possibly through a water-to-oil cooler as well. The icewater tank can be re-filled for the "back up" attempt on the second day.
I'd like to raise the record to something over 110 mph, just to have a little cushion. Depending on the final selection of tire size and transmission ratios, the rpm's that the engine will have to turn through the measured mile will be somewhere between 4600 and 5600 rpm. 5600 scares me, and I don't think 4600 will be enough to make peak HP. I'll be aiming for a combination that will peak more in the 5,000 rpm range.