yeah.. if your gonna replace the drive train anyhow.. get a 2WD..

new 2.2L block goes for about $1400 these days.. and you can put WRX heads on em.. or different sorts of 2.5 heads to get different CR's .. www.legacycentral.com has some REALLY cool info on the 2.2 engine if you decide to go that way.. including a write up by a guy who was running his legacy 2.2 @ 30 psi on the drag strip and taking it to 9K RPM .. on a stock internal car with lower comp heads (i think 98 2.5) ... basicalyl the block is almost exactly what was in the 22B and is one of the strongest blocks subaru made.. alot of people thin its stronger than the STi's 2.5