It'll fly with 60 hp.
My buggy had custom body based on a Meyers, 6 point cage with side bars, minimal bumpers to get licensed, fiberglass seats....nothing extra and it weighed in at under 1100 lbs. I had wide, 50 series slightly smaller than stock diameter tires. With the stock 1600DP (50 ish HP), it wouldnt spin the tires on dry, but it would come close to lifting the front with an empty tank. And not much could stay with me between lights. But it ran out of RPM and hit some serious wind drag after about 110 kmph. But boy, was it fun a lower speeds! like a go cart.
I think swapping a TD motor and tranny would be be relativly simple, give more power, more speed and probably pretty impressive around town mileage. A cable shift tranny would be simpler. The motor and tranny would be a bit heavier, but would sit further forward. Radiator behind it, save some weight with just a straight pipe for exhaust after the turbo.
Need to weld up some custom axles with type 1 CV outer, Mk2 CV inner.
I'm not sure how the water cooled tranny would like offroading, but that wasnt what my car was about, sat way too low.