Would bypassing my catalytic improve HP and if so, by how much? Thanks.

Well yeah....in Germany you could order cars until 89 (I think) w/o a converter from the factory and the HP ratings were always higher....on the 560SEL, the power difference was 21 I think...on smaller motors the difference was a little smaller... Just remember though, that removing it is very illegal and detrimental. I'm not a tree hugger, but just visit any big city and look over the skyline. You Southern Californians know what I am talking about. I would recommend going with a high flow unit. You might still get more power completely w/o a cat, but they are going to be vastly better than a factory unit from the 80s and your car remains completely legal. So instead of a 21HP difference, it may be...5 or 10. I personally think that the few 5 or 10 ponies are worth it...it is still going to be a lot better than stock.
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