just get a standard blacktop, rip out rods and pistons, go to the states and get forged pistons and steel rods (go for bigger bore if you wish too) and build up the engine.
there you pretty much have a bottom end for a grand that wil take 400-500bhp comfortably.
then get a t34 or similar sized turbo and you're on the doorstep of 400bhp, management, injectors and fuel pump need to be capable though as does cooling systems.

can be done cheaply, can be done reliably, just got to get the right mix and what you want from it.