well to answer your questions first.
1 No and No but only if you want to

2 First you have to calculate what the largest
capacity motor you are allowed to go, in
Queensland ummmmmm I can't find it
but you have to ring around and tell them what the weight of your car is and work it out from there. They will tell you what is required, and how much the modification plate is....in Qld its a Blue Plate

For my Sunny it is 2.1 Litre turbocharged or
2.7 litre I think for normally aspirated as the largest capacity I can have, the 1200 is less I believe I can't find the formula arrrggghh

I believe the 1200 is not heavy enough but you must enquire first. You can make it legal but that would be very trying. I really would go the latest model CA18-DET It has an exellent head and intake manifold as well as valve train to cope with 8000 rpm and take up less room than the SR20 in the engine bay. And its definitely legal.
Pics None here but heres a web site worth looking and study it carefully.
http://datsun1200.com/modules/mylinks/visit.php?lid=14
TA