I would just put a turbo'd 354 in it. They are capable of a cool 200hp, in Marine apps the engines are rated at 240hp stock. But then again, they always have cool water running through them.
We have 4 1130's around the farm, and I love them all. We just turn the pumps up on them and they make a very reliable 150hp. Thats not even putting a bigger turbo on, adding more coolant capacity, etc.. All we do is turn them up a little.
As for the hydraulics, I know of people that do away with the radial pumps and use a small electric motor hooked to a little hydraulic pump to run their brakes and steering. But they only do that to pullers.
$2k for an adapter plate?? That seems a bit wild, all that really needs done is trace out the two bellhousings, and transfer punch the holes then cut them out.