i would talk to bruce davis performance in sydney, for the budget you are talking he could build you one hell of a rover v8 and the fitting issues wouldnt be a problem then.
an LS1 into a defender would be cool though, i reckon an auto box, but you would need to research what would fit the best, and you would need to spend som cash upgrading the rest of the drive line cause a defender drive train wasnt built to take the power of a 5.7L v8



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