I've owned my s1 190 for six years now. It came from the factory with about 173hp. Currently the lowly Rover motor cranks out 225hp and 165ft. lbs. of torque. I've driven the new fed car on the track. I've ridden/driven a dozen different transplants over the years. I've only been in one that does what you guys are looking for and it's cheap.
http://www.auto-teknix.co.uk/ This is the most thouroughly engineered swap I've seen. It works and does everything Bernard says it does. I was in the 250 hp version and that is only 25 hp more than my car. BUT, it has 100ft lbs. more torque. Torque is the answer. The Audi conversion has bags of it. I'm NOT trying to start another flame war, but I am going to build a second car with a 300hp, 300ft lb motor. all in for under 20k. Hooo Haaa!