I have two decent bodies that need an engine:
'86 Mustang Hatch
'72 Mercedes 220
I was looking at late VW and MB model donors and haven't been happy with what I've found so far. A friend has suggested a BMW M21 for the Ford but I don't think I can get the desitred performance from it. My aim is 430WHP (~500HP at the crank) at ~6000rpm. This seems to make an oversquare engine necessary. Since I will be dealing with mostly free blocks and heads, I might have the budget to bore and shorten. I will be using a turbo and I'd like an inline 4 or box/V6 and for it to weigh <500lbs.

First question is, am I dreaming? As I understand it, it's very difficult to spin diesel up so high because the compression needs to be sufficient to heat the air and that requires a longish stroke but a turbo will increase the compression so I'm hoping I can find a way to get around this limitation. How much does the compression increase with 2 bar of boost?