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The VF52 is good for around 300 HP, I would not go bigger with a high mileage engine. You can get a stage 2 block, upgrade the fuel system to 1030 cc injectors with a TD06 20G, and shoot for over 400 HP with more parts and proper tuning. A stock clutch is good for 300 HP no problem. If you go with option 2 seriously consider an FMIC and better clutch.
 
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