X2^ That's too big of an exhaust pipe for a stock engine. Unless you plan on swapping out the intake and/or header for a less restrictive, aftermarket type, I'd downsize to 2" tops or go back to stock.
As for the engine swap idea, what condition is the current engine in? If you're willing to go through with it, I've seen those VX engines going for $400- $500 in my area.
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