It really depends what you primarily use it for, and also how you drive it. Economy has little do with displacement, a bigger motor requires less left foot to carry the required speed.
If you are crunching miles onroad in a straight line, then tbh there is little to pick between a smaller Diesel and a Petrol.
If, when you use it off road, you like to throw the ting about then petrol is the way to go, if you like to crawl up rocks etc, then diesel might suit you better.
Most swaps have been done, VW 1.5>1.9s, Vitara 1.6/2.0 8/16v all the way up to V6 Vortechs and V8s.
for cash spent vs benefits, the 1.6 8/16v conversion with fuel injection in my opinion will show you the best return, the conversion is relatively simple, and cruising speed is a lot less laborious. Depending on where you live, Diesel prices have skyrocketed, pretty much chewing up any savings you might get from MPG over petrol.
I really would not throw cash at the stock 1300 lump, the more you try to make it into what the standard 1.6 can produce, you are eating into your wallet for parts, and the motor will drink more anyway.
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