[Gelbster]

1. Dismissing California Smog rules is short sighted. Other States seem to blindly adopt them. So I suggest the availability of a CA smog compliant engine is vital.There are Audi V8 Ca smog compliant engines.
2.The insurance issue is another hurdle. If an insurer 'sees' a massive increase in engine displacement and power it will be prohibitively expensive to insure . The alternative is to 'forget' to tell them .That is the same as no insurance +fraud+ unlimited personal liability.Not good if you own a home.
There is a milquetoast solution:
The Audi A6 3.0/ 3.2l 32 valve FSI V6 from the A6.255hp. On paper it would pass Smog,be insurable, fit easily(shorter but 1/2" taller than the 3.2 flat 6),same bolt pattern?
It may not be exciting but it is practical and highly tuneable.