Hi mate, dunno if your still after help with your mk2. I also have a mk2 1.1 so hopefully I can help out.

First off as for looks the mk2 is a nice little motor, you can make it look different buy fitting ghia bumpers or just painting the standard ones, as for wheels all classic ford wheels fit( apart from Granada wheels) If you want a "old skool" look maby some 6x13 4 spoke rs wheels (like those on a capri laser) pepperpots also looks good and where fitted to the mk2 xr2. Lowering is pretty simple as its a basic car. A set of xr2 springs will give it a nice ride height if you want lower there you can get the springs from Burton power. As for exhaust you could ways do it the cheap way and fit a cherry bomb. How ever back in the day there where series x kits available for the 1.1, different carb, intake , exhaust etc... they give a decent power upgrades over the std motor. But hard to find now. So you need to get lucky on ebay As for engine swaps you could fit the 1.3 version of your engine or a 1.6 crossflow from a mk1 xr2, this will keep it period looking under the bonnet. Then there are the 1.4 and 1.6 cvh engines, a pretty basic fit and the 1.6 will make 120 Bhp with out much work. Then there is the zetec. This can be a big power engine that will mate your car bloody mental, harder to fit though.

Hope that helps