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I assume you're thinking about the 960 T6 route, not switching in a 196 hp engine for a 204 hp original..?
Engine blocks are basically the same and would fit the tranny. Oil sump and probably intake manifold must be switched to 960 components. Exhaust/turbos will fit with some custom work but the difficult part is the FI - using the 960 system would keep the engine-transmission sync functionality but it doesn't incorporate turbo pressure or variable cam timing control. The S80 system, on the other hand, was built to work in the fairly complex CAN network of these cars. Adapting it's ECU to a 960 would be a royal PITA, if at all possible, and there still would be no trans sync.
Conclusion: neither way is a straight road. I'd vote for 960 FI combined with some kind of external pressure control. Variable cam timing probably would be a no-no; haven't looked into that (yet!).
Martin
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'65 121, '73 165
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