I think his budget would be gone if he went with a turbo going over 300hp. It wouldn't run on 92 octane either (at least that's as high as I get out of a pump around here).
Here's a guy runing in the low 13's with a turbo.
http://www.geocities.com/turbo95miata/performance.html
A LS1 Miata could run low 12's. I know turbo cars can go that fast, but then they boost over 15psi and do stuff like add tolulene to the tank.
I think the point of the project is to spend $14K including the car. Just buy the motor, and have a fairly simply car to go fast. Both ways would work, but some people want to have a V8.