Race regulations is partly to do with it. A lot of the race series we plan to do are catagorised by power to weight ratio. If we make it too powerful we will end up racing against cars that have simillar power but much more mechanical grip, and we wont be competetive. Once built, we will need to do a few races in the car and see what needs developing. Maybe in the future we will go big turbo. Like you said, the engine is certainly built to handle big power and torque.
We are currently building an S3 8P big turbo set-up for a hill climb car and I plan to put a thread up in our forum soon.