Truth be told, the main difference between the M20 and M42 is the way they rev. Of course the M20 saddles you with a bit more weight, but also give a bit more power. Frankly, the M42 is just as competitive (and more reliable/efficient) as and M20 car, as our Chump Car has proven.
As for performance engine mods, outside of building the engine you can get a chip, a and some cams/matched injectors. Beyond that an exhaust is more for noise, as is an altered intake and a lighter flywheel really just changes the character of the engine more than giving it more power. My advice is to invest in some good suspension, good pads and more importantly some nice tires. Anything beyond that really takes money and much more importantly driver skill to add appreciable gains.