I like the 4 cyl. in the Colorado, but it's a huge engine. I don't just mean the discplacement (2.8L '06 and before- 2.9L after)- only modern 4cyl. I can remember larger is the old Porsche 944...but physically, it's a monster and particularly tall given its overhead cams.
The car hobby is for all and modifying cars is great. Personally, if I were to consider an engine swap for a B, I would take a good hard look at the GM 60 degree V6- they can be picked up inexpensively and there are kits out there for the conversion. Built right, they will get you over 200hp- even stock, they'll do 160hp easy, and I do not believe they weigh more than the original 1.8L 4 cyl.
Good luck!
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As for using an OBDII engine in an old car, it's done all the time. The key is to use the original engine basically as a whole with the original computer. There are adapters for sensors made, or a custom harness can be built. You would have to add an O2 bung to the exhaust and probably some sort of vehicle speed sensor- or, as I said, there are adapters to fool the computer into believing some of these things are there when they are not. After all- these are non-emission controlled cars (in most places...if they're old enough).