My old 1.1 106 had a turbo slapped on it and a few other little bits and peices and I was running it at 106BHP, it could quite happily keep up with Saxo VTR's and the 106 Gti.
The GTi engine conversion is a very good idea as the TU engine is a wicked little powerhouse that, when tuned properly will surprise bigger and more powerful cars.
An example of a truly amazing GTi is on YouTube, just search for '106GTi' and you'll see a GTi walk all over an Alfa Romeo 166 3.0 V6. It is truly awe inspiring and proves that Pug really did make a decent little engine.
I think the XS lower mounts are able to support the GTi engine and the best place to go for tuning etc is Eccosse, they really are the Pug specialists. Check them out and they also give free advice on where to get re-cond engines from and the prices you can expect. They may also fill you in on a few little tricks you can do which will have your car way ahead of the competition.