I've often pondered as to what engine I would use if I were to do this.
I love the idea of a V8, but the straight sixes of the 80s/early 90s are also very attractive propositions.
The m103 is fantastic engine and has the attraction of being supremely reliable and also very simple.
The next evolution, the 104.980 (300 24V) engine was also a fantastic and very powerful engine which I think would be a superb choice and then there's the 104.992 (320 as fitted to this car) which has a longer stroke and so is more torquey but not as "willing".
I think I would probably do something sacreligious though and drill holes through the bonnet and install quick release pins.
In the next life perhaps.....
There are two considerations. The first one is that if one is after performance while retaining good drivability on a road car, then the V8 option is more advantageous as it offers a bigger displacement potential.
The second is car balance. Thanks to a more rigid architecture, V8s allow for alloy blocks resulting in a similar overall weight compared to an L6. But V8s' center of gravity is lower, as the heaviest part is the crankshaft. Being shorter than L6s, V8 also sit more backwards in the car, resulting in an overall better weight distribution which is important on a Pagoda given its short wheel base.
L6s however offer a different character. So personal taste may enter the equation.