You might aswell drop an m20b25 in it.
I have a 320i and recently purchased a 325i, there is a definate change in power between the two and for your budget it really would be more appropriate,
I have a chipped ecu which also makes it a lil bit more fun, you can pick them up for like 50 bucks from ebay.
I wouldnt bother stroking unless you were stroking a 2.5 to a 2.7 as it just becomes too costly. A straight swap would be cheaper and easier, just make sure you get the afm and ecu with the engine which hopefully has a fair amount of ks on it relevant to age of course.
Good luck with whatever decission it is you make
JC