Hey James, I've never heard of anyone putting a 16v head on a 1.6L mk1 block appart from an oettinger motor(very very few worldwide). I "think" the piston spacing might be different making it impossible to put a 16v head(mk2 or mk3) on a mk1 1.6 block.
And the conversion you've heard about is taking a 2L 8v block and putting the 16v head on that. With a few modifications. They have a the same/similar bores so you don't have missmatch issues. With increased area in the 16v head over the 8v head, hence you get a compression drop, which is good for forced induction.
As for bigger valves:
8v yes can be done, usually take Audi 5E valves(same as mk1 1.8L Gti) and valve seats and get a professional to put them in. Bigger valves again are available but cost goes up greatly. And would probably have to be sourced from Europe.
16v not much point, 16v's have big valves as is and would need some serious race porting and race cams to get any benefit of fitting larger valves to a 16v.
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