Some pretty broad questions calling for some equally broad and extensive responses.
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At the momemt I just want to know what is possible from an engine rebuild:
Anything is possible, feed the project money and you can achieve anything.
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What can I expect to achieve from this process:
You will most likely finish the ordeal realising you could have put that money to better use!

You will also come to the realisation that pursuing high power from a naturally aspirated a-series is an expensive and laborious process. You will realise that other engine conversions with engines already producing big power from factory may have been a more viable option (financially and time-wise). You will also come to the realisation that you either like these motors or you don't.
One thing you will gain is the understanding that your 1200ute would be more unique than most as you have retained the original engine series. It will stand out amongst all the fizz-bang turbo slugs that people keep dropping into their engine bays, turning their Datsuns into front-heavy rice-missiles

(jokes people)
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What sort of things should I be looking for and what things (if any?) to avoid:
Avoid taking your parts to the engine builder down the road; they hate old 4cl two valve pushrod engines and they'll most probably charge you hard and do only half the work.
Avoid getting caught up in getting all the expensive stuff, there are a lot of novelty performance parts which are nice but you can get equal quality items for a fraction of the price.
If you are buying second hand check the quality, don't let anyone walk all over you, ask for details, ask for pictures and be ruthless when you are determining quality and condition.
Avoid expecting huge numbers until you have at least dyno'd the engine and tuned it properly. Some people have literally gotten upset with low figures not realising that they hadn't tuned their engine properly.
Ask questions but do your research, a lot of new members are too lazy to search something so their questions surfaces sometimes only a day after someone has asked the same thing.
To condense it here is what I'd do, in general order of cost stages (lowest to highest) and performance (good power gains to minimal gain):
Electronic ignition
Mild Cam
Upgrade Single Carb Weber DCD, DGV, DGAV etc
Electronic Ignition
Thin Performance Gasket
Moderate Cam + Twin SU style Hitachis
Flat-tops & fly cuts
Mild cylinder Head work
Thin Performance Gasket
Crank-fire ignition kit (ECU?)
Balancing of all reciprocating components
Balancing of conrods, pistons etc
Upgrade of Clutch
Lightened flywheel
High volume oil pump
Lightweight Tappets & Pushrods
Lightweight Rocker arms
Aggressive Cam + Fuel Injection/ Multiple Carb
Flat-tops/Dome-tops
Knife edge crank
Extensive cylinder head work (would have purchased a GX head by now).
I'm sure all of those lists will double in content as I can't list everything and when you actually get round to doing it there is always a budget blowout. Generally once you start looking for decent naturally aspirated power the costs will skyrocket for each and every kw you pursue.
All I can say is that it can get expensive very, very quickly.