I can understand the points made above, but I'm still going to ramble a bit here because it's a good, friendly discussion and I haven't had one of those in BMW land yet.
We've done stroked and overbored VW engines in the past and the results never really show a gain that warranted the cost of the parts to do them. M42 cams and crankshafts are REALLY expensive compared to the parts I'm used to so the HP/$ figure still seems insane.
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The thing that sets them apart is you guys are stroking from 84mm to 88mm on a 140mm rod (if you do in fact maintain M42 rod length). VW guys are going from 86.4 or 92.8mm to 95.5mm on a 144 rod. The resulting 1.50/1 rod stroke ratio gives you an engine with so much rod angularity it's trying to force the piston out the SIDE of the bore. We tried to tune one a customer built, 2.1L 16v (83.5x95.5, 144mm rods, 11.5:1, fully built). The result was a mechanical limit of 6500rpm caused by rod angularity above which the engine simply did not want to spin regardless of the JE pistons and Pauter rods, ITBs and 288 degree cams that were inside it. The ITBs were a waste because I had tuned their harmonic length to 7000rpm and had to advance the hell out of the cams to bring the opperative range down to a number the bottom end could spin. It made more power on stock cams. This engine eventually scored a cylinder wall and piston from its heavy side loading. Good riddance to a motor that never should have been built.
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As for the turbo reliability/milage misconceptions. I've thrown boost at engines with 190K miles on them because... well... we didn't care. It's still daily driving. I've also seen engine surpass 110K with a turbo on them the whole time... turbo is still good, engine is still good, everything works as it's supposed to, nothing has been replaced. Milage? How about 28mpg from a 1.8L 16v that makes 220hp and 230ft/lbs? The beauty of turbocharging is that it's a docile little 1.8l with low compression that doesn't use much fuel... until you stand on it.
The things that make an engine a pleasure to drive on the street just happen to be the things that make them excellent for turbocharging. IE: mild compression, mild camshafts, small ports. The high compression, big cams and large ports associated with N/A tuned vehicles are harsh on daily driving. Pure and simple, you can make more power, maintain more drivability, milage and much of your reliability with forced induction.
The only problems I've had with street turbo engines are:
- Big injectors don't like to idle smooth... like BIG... like 500cc+ but now we're into 300hp 4cyl parts. You need almost as much injector for a 220hp N/A motor as you do a 220hp turbo motor, so this isn't specific to turbocharging
- Harsh clutches. Once again a bi-product of massive power and something you have to deal with either way.
- Drivetrain failures from massive power numbers

Once again, not specific to turbocharging.
I've built and daily driven both fully tuned N/A (2L 16v Rabbit on ITBs with Megasquirt) and turbocharged (a host of turbo VW 16vs) cars. I enjoy both.
If I were to suggest anything it would be to put youself in the situation to drive or at least ride in a couple cars with both of the above options. Oh... and contact Importperformanceparts.net when you need parts, they should be able to hook it up on pistons.