Maybe I am just getting old and conservative, or maybe the 40 years of being interested in hot rodding causes me to say " Do not attempt to get more power out of the four cylinder " .
The reasons start with these.. 1. you can not increase the compression. 2. you can not turbocharge it without beefing up the critical parts.. or losing reliability. 3. You can not increase its breathing ability without screwing up the gas mileage.
Go to the 5 cyl... and the turbo if your really wanting more power... or transplant a gas engine into it...But even the 5 cyl with turbo does not have much power off the line,, the turbo kicks in and it flies low when it does... but the physics of it are such that is not the kind of feel which hot rodding a gas engine can give you.

Greg
I have a 1980 240d with the manual 4 speed. It is very peppy, and I love it.
Swapping a manual usually is not a big deal... and you could even use an aftermarket hydraulic clutch mechanism I presume... but you may need to make provisions for making the pilot hole in the crank .. it seems that MB did not make generic cranks... but only put the holes for pilot bearings in engines which were scheduled to be have manual transmissions behind them...
If you do this,,,please take pictures and notes as you go so you can put up a FAQ page... many of us want to do this....(manual behind orig auto trans engine )... Thanks, Greg