the torque spikes from the S&S motor I recall being the biggest issue when they were first designing the M3W. Its not a matter of if the engine could produce more power as it most certainly could without any of the internals being changed out, its how you get the rest of the car to work with it.
First, more power will simply equate to more wheelspin (something currently ever-present in M3Ws. An even bigger factor is if the components between the engine and the wheel can handle it. The mazda sourced transmission would have no problem with the extra power as its overbuilt. The transmission is from a miata, but was initially built for a truck motor.
The real issue is all the pieces between the transmission and the wheel itself. Morgan was having all sorts of issues with pieces breaking early on in this section of the car and was probably a huge factor in the detune.
Before tackling an increase in power, first tackle and increase in reliability and ability to for the drivetrain to accept the extra power.
