The 2 liter 914 engine was a lot better than the 1.7/1.8 engines because Porsche redesigned the cylinder heads just for the Porsches. VW Buses never got the upgraded heads. They still didn't make much power due to the crappy camshaft designed for D-jet and the valve springs limit rpm to 6200 or less anyway.
A fully prepped IT legal 2 liter 914 engine will make about 110 hp peak. At 2260lb how does that fit the formula?
The stock brakes are fine if you know how set them up. (The BMW caliper upgrade is a waste of money IMO.) I used the stock 4 cyl. calipers on my FProd car for several years. With good pads and cooling ducts they are certainly adequate.
I think I'd rather run a 2 liter in ITB than a 1.7 in ITC.
Wheels and tires are a challenge. Factory alloys are 5.5" x 15" with 4 x 130mm bolt pattern. The rear wheel wells will barely accept 205 Hoosiers with perfectly offset rims.