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300 Horsepower is possible from a 2.3 Merkur. You will need:
Ported and polished head with big valves.
Gutted upper and knife edged lower intake manifolds.
Complete free flowing 3 inch exhaust system.
At least a T3/T4 hybrid turbo.
The largest intercooler with fresh air feed that you can afford.
High pressure fuel pump.
Adjustable fuel pressure regulator.
K+N filter with fresh air feed.
Big VAM and a PE processor or LA3 or an EEC-Tuner.
Dyno testing time or a G-Tech meter.
94 Octane or higher fuel.
Adjustable cam sprocket.
Stock ignition system.