well, that wasn't as encouraging as I hoped.
in order to make any power they basically end up re-engineering the whole motor don't they?  Different rods, pins and pistons.  Different timing chain.  Massaged head.  Different springs, retainers, lifters, cams.  Guess I should expect that, but I think most motors respond well to this much effort.
Next bonus check I get, I was thinking a set of cams and a call to downing/atlanta would do it for me.  Probably some tuning shortly thereafter would be wise too.
I spent less than $1000 on my SVO and put 250hp and 300lbs of torque to the ground on a dyno.  
   Wouldn't ever handle like the bimmer, but damn.
You can get power from the motor without touching the bottom end. You need head porting and cleanup, a chip, and a cam. At least.  Until you do all 3, you are talking VERY minimal gains. A chip can improve midrange, but beyond that, you have to start looking at some serious work. You can take this motor to about 7500, but that is about it in stock form, and you better not leave it there long. Power output... probably 180hp at the crank. 
The Metric Mechanic motor is a full on race engine for the street. You can take it to redline and keep it there without fear.
Unfortunately BMW designed this motor in a way that limits its potential. Not that many Euro vehicles (brought to the U.S. at least) are easy cranked up. You cannot compare a chunk of Detroit iron with a finely tuned Euro engine. They spend big bucks pulling lot of power from small motors. We spend little money and dump more cubes. Any tweaking helps an American motor because they are not so high strung.
Yes, I know, 140hp (or whatever it is) is not much from a 1.8 in some peoples opinion, but at the time that was not bad numbers. Also keep in mind, had BMW left lots of room for easy tweaks, no one would have bought a 325 or M3, since this car only needs about 190hp to beat said cars on the strip or track.
There is a guy trying to it 180hp N/A in this thread. 
http://www.m42club.com/forums/showthread.php?t=2971