Can you please tell me what went wrong?...I have planes to get around 120 hp out of my 1.6, but with 1.9 head, and all recommended upgrades....Can you PM me your mods, so I can see what you have done?...Or there is a thread on your meltdown?
I also considered 1.9, but parts are almost double expensive than a 1.6...
I have an unfinished 1.6L with flowed 1.9L head in a MK3 Golf and I out-accelerated an equal-weight MK3 Golf VR6 (172bhp).
Although I don't have a dyno sheet my very conservative estimate is 155 wheel HP / 175-180bhp. At 4,000 RPM my front wheels started spinning.. the power really ramped up then! Had zero intercooling and 0% smoke so it worked well with lots more left.
As for low-RPM torque, my 1.6TD's torque was better than the 1.8L 8v gasser that was in the same car. I always shifted at around 2,800 RPM during daily driving with the 1.6L so longevity is not an issue. I only rev high during racing, and boy does the 1.6L love to rev! Wheels would also spin between 1,000 and 1,500 RPM in the wet - my 1.8L 8v in the same car + wheels couldn't do that easily.
However, if I don't get the rapid boost that my GT20 turbo provides during low RPM (i.e. disconnected intake pipes) then the 1.6L is a total slug.. worse than a N/A 1.6 Rabbit due to vehicle weight & low compression. Thus, I'm concerned about the daily driving fun factor if I get a big single turbo for my 200+hp goal. A single VNT or compound turbo setup will be ideal. Ditching the porky MK3 and jumping into a lighter MK1 or MK2 vehicle will help too.
My 9mm fuel pump had camplate float (cuts fuel) at approx 5,250 RPM so I couldn't rev much higher than that. The pump will be rebuilt in addition to a 11mm and 12mm plunger upgrade.. I also received custom injector nozzles from Dieselicous to replace my GTDs and to solve the no-smoke problem. Hoping to reach or exceed 6,500 RPM with good fuel & air flow (and especially intercooling that I didn't have before). There's lots left in the 1.6L

Anyway, back to your question; 120hp is not a big deal. That power can be achieved reliably with the 1.6/1.9 setup. Essential power enhancement items are a good fuel pump and a decent intercooler. A lot of people still underestimate/ignore what a good fuel pump upgrade can do. Most people already know the rest; EGT and boost gauges, clutch upgrade, boost controller, etc. There's more info in the FAQ / Tech forum.
For what it's worth, for my 1.6/1.9 rebuild I am planning on custom rods + AAZ pistons, giving it a 1.9's bore but retaining the 1.6's stroke.. 1.7L displacement ultimately.

I do not discount that a 1.9 with fully lightened internals will kick major ass regardless of it's total cost. 935racer might go that AAZ route if he's not too enthralled with his ALH TDI project so it'll be interesting to see results

Shameless plug; my GT20 turbo & exhaust manifold are for sale. It is an awesome daily driver turbo that combined with Giles' stage 4 pump will provide great low RPM torque & good midband power too.