You don't need more engine, not in terms of physical footprint. Rather, you need more turbo. That and all the other detail differences that eke out more volumetric efficiency from an engine. And most importantly, the $$$ to do it. Ken Block not only has plenty of that, but also a direct line with the manufacturer's performance engineers. Bottom line is that it's not impossible (far from it) to make a small displacement engine turn out big numbers. Its also not cheap, and generally not long-lived. It helps that the standard 1.6L motor has the same exterior dimensions as the 2.0L version, so the 25% bump in displacement makes for a better starting point with no space penalty.