If the rods are stock that's probably why it's so conservative, an old friend of mine had very banana shaped rods on his 1.9 at about 250bhp. Sadly I've often seen the 1.9 conversion fail to deliver the goods, whether this be a result of the build or it's subsequent setup I couldn't say.

You aren't making bad power and it's probably nice to drive so unless you want to start spending money I would leave well alone and enjoy it.

Owning a 260bhp S2 myself I can honestly say the chassis just doesn't cope with the power and is part of the reason I don't use it much.