I don't want to put you off, but here are some issues that stop people from trying.
The 1.6 16v engine will fit, but theres a problem (actually many), you will need to fabricate entirely new engine mounts for both engine and gearbox.
The exhaust manifold will be closest to the bulkhead so temps inside the car will get on the warm side (turbo is a no no, just no room for one unless rear mounted), and the inlet manifold will need to be ditched and in turn replaced with ITB's as there just isn't enough room for it (so again turbo is out of the question).
Quite alot of the front end will need to hacked away to allow some room, battery will have to be moved, heater matrix will need to be removed and replaced with a smaller equivilant (assuming you wanted heating inside the car).
All new custom driveshafts will need to be measured and made.
Now heres something that made me think " whats the point", the 1.6 engine is only 103 bhp, whereas the panda 100hp is a 1.4 16v, and is 100hp

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Back onto your boring idea. The 1.2 block can be bored out, but I think at most I would go to is 1.5 as there just isn't enough meat there. Going further than that could result in the cylinder walls beaking down due to heat.
Then you would need a set of custom pistons making which can get quite expensive.
The question that needs to be asked is, do you want a fast car, or a fast cento?
Thanks