Hello mate,
If you're a beginner then I would suggest forget trying to build the engine up yourself as the slightest mistake down to inexperience can be very costly to rectify!!! But if you are confident and know what you are doing and have all the necessary equipment/tools available at your dispersal then it's definitely worth giving it a go as you would save yourself a lot of money and you would get a good feeling of satisfaction from it.
First thing i'd say is figure out what do you intend do use the car for? For example would it be a fast road car? a Racing car? show car etc then you can decide what you want to do to the engine etc. Its always worth planning ahead. You never know if you look around you might find something better elsewhere.
I would say the cheapest solution here would be to get another 1.3 turbo engine and fit it straight into the engine bay as Chas has mentioned. You could even stick in a mark 2 engine if you wanted to but you'd have to change the loom over too so it would be slightly more work but the options there if you cant find another decent 1.3 engine so bear that in mind. Mark 1 vs Mark 2 engine is another discussion altogether and both have their pros and cons but I will not talk about that right now.
But if money is no object to you then you could rebuild your engine but like i say it can get very expensive, my rebuild totalled around the £300 mark for all the parts needed as i did some of the work myself with a lot of help as i am not the most mechanicly minded person myself!!!
I cant even remove a rusted bolt on my UT for f*ck sake hehe
So what i am trying to emphasize is that it can get VERY expensive if you find any nasty surprises along the way which you are unprepared for so keep that in mind. BUT like Dunc says the car sounds like a perfect base for big power as long as it has a decent shell to begin with.
So if you're prepared to get stuck right into it and spend some time money and effort on it then i think you should go for it mate.
And good luck and tell us how you get on.

F R O $ T Y