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My vote is rebuild s2 engine or maybe get a neo (but expect you may need to rebuild that too). Doing an engine conversion you would have to be a true tragic nowadays and actively be aware there's better/smarter options for value. -
Or buy one someone built earlier! (realistically V8 mustangs or MKV supras are great). I see people nowadays putting ZF8's into MK4's, and people putting 370z gearboxes, diffs, axles into R and S chassis and it's like.... just get a 370z at that point and mildly boost the 3.7 instead of the 2L and away we go...
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If you're going to go v8 or really any swap now with all the tax, I'd most likely just get rid of the car and start with something else. Unfortunately, I have a mate with a surplus of ls and Ferrari/Maserati v8's that's always tempting me FFS lol. -
If you can get a clean, tested neo from Japan for $3500 these days, it's probably worth getting either way, hard not to be skeptical at that price. Otherwise probably rebuild the s2.
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Yeah, better just to cut the diff off the awd sump and grind down the fins on the bottom.
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