heck~ no way 3K can bore up to 1.6liter lar >_< it must have been a 5K engine (1.5liter->1.6liter make more sense).
okay, go double check and see if it really is a 5K engine (go check the engine number on the block, should mention it). and if it really is one, and you still have that 3K engine head, then you really got yourself a gem there.
for normal people like us who want to play with toyota's old K-series engine, the easiest way to get power is to use a 5K block (1.5liter, from lite-ace van) and the 3K cylinder head (your car's ori engine). bolting on a 3K head on a 5K engine is like an instant bolt on performance part. This is because the ori K-series engine has low compresion ratio, the highest among the modal also only got 9.5:1 ratio, which is quite low. Bolting on a 3K head to the 5K block instantly give you 10.#:1 ratio (not sure about the exact figure), and if you use premium ron97 petrol, no knocking or pinging to worry about.
respond is faster too, basically just like an upgrade. This mod is done over and over by australian playing old school toyota, although i didn't try it myself, but with so many sifu in australia saying it works, i assume its true. works with 3K head + 4K block combo too, probably even better for racing compare to 5K block since 4K revs better.
other things that can be done:
-even higher compresion ratio
-lightened pushrod
-high duration cam (although i dunno where to get this)
-better clutch (TRD still sells them for 4k, asume they will fit anyway)
-weber, nuff said
-exhaust system could use some redesigning XD
-other than that is more on improving handling and chasis already....
