FYI, Currently a Turbo KA will not pass smog either. There is still the possibility that Greddy may get a CARB EO # for their kit, but I wouldn't rely on that until it actually happens.
As far as putting a turbo on an older KA, there is little risk so long as the motor is still sealing well. An issue you might run into though is that if the motor was given a steady diet of conventional motor oil, the seals may not take too well to switching to synthetic(highly recommended with a turbo motor). The internals of a KA are plenty strong enough to handle 7 psi. In fact many have been running 350HP on stock internals and recently, IvanatSPRacing pulled off 400+ HP on stock internals. While one KA at that power is hardly enough proof to set a reasonable limit on power with, it's certainly higher than many give the KA credit for. The strength of the internals at 7 psi wil be fine. But you'll want to check and make sure cylinder sealing is still good.
As it happens, my 98 240 will be going up for sale soon. It is turbo'd already. Email me if you are interested and I can give you some details.
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