Well a standard engine wouldnt be able to take 300bhp, and im not sure the head would flow enough for 300bhp either. The dynamic compression ratio increase from the turbo would increase power to a certain extent, but you can only increase that so much without it going bang. If i was going for massive power with the 1.7, id look at a good set of main bearings, a good set of big end bearings, stronger con rods, stronger pistons with a thicker crown to help disperse the heat, id go for alchol injection to cool the charge down, the head would have to be flowed properly and bigger valves and valve seats fitted, and of course the right turbo would need to be used, for peak figures id go for a GT2071R or even a GT30, loads more lag, but top figures produced. For drivability and lower down power id go for GT28R or possibly GT28RS (thats what i have on my 2.0). The smaller turbos are slightly harder to get bigger top end power from, without going past its peak efficiency.
Turbo size is a very important factor, and the use of the car would be the main decider. A 1.7 with a GT30 on would be virtually un-usable on the street, you could drive it but the power would be so unpredictable because youd have about 100bhp, then at about 5500rpm-6000rpm, youd get another 200 horses thrown into the mix! But it would be good on a drag strip, once your in boost, nothing will catch you!!
P.s if you want to continue with this topic, it might be better to talk on the turbo talk thread rather the cluttering up Pauls project thread, unless Paul is ok with it??