IMO,
Probably the best choice for 4L is going to be a 3.9L 4BT (I4) Cummins. Pretty sure it will fit in that envelope (it might be too tall though), and racing parts and experience are available readily, since it shares geometry and parts with the 5.9 I6 Cummins you find in pickups, medium duty trucks, and farm equipment. It's mechanical, so no $$$ standalone computer to run it. They are cheap, plentiful, and can be turned way up.
With the car engines, I'm not hearing of many people turning the engines up really high. If you need 2HP/CI or higher, it would probably be safer to start with an engine that you know can be turned up that high.
If interested in 4BT engines, visit
www.4btswaps.com and do searches and post questions. I don't know very much about them though.