Doc is right, though ... IF you're willing to chop the fenders (I'm not) and willing to fiddle with setups (which can be the best part), you can see a great performance improvement. I've got a lot to fiddle with, like changing toe, modifying the steering arms, playing with spring rates, getting rebuilt rear dampers, etc, before I really run out of room. Also, mine's probably the fastest (in a straight line) of all of them due to my engine mods. But it's also by far the least well 'set up' in the handling department. I also can't run Kumhos, which are considered the best tire for absolute grip. My Yokohama's are excellent for treadwear with a good compromise on grip and they just barely fit. The Kumho's (in 175/60R13) are actually .6" wider than the same sized Yoko's, making them (probably) too big for my stock fenders.
However, I've considered going to larger front wheel/tire combos, as I think it could give me more front grip (the back is pretty decent). I find that the tire pressures can get absurdly low with the race tires in the rear before they roll due to the live axle. This can help with rear end grip. I'd also like to experiment with lowering spring rates and installing a rear swaybar to compensate. I have a few theories that need testing.
As to intakes and exhausts, proper dyno development of a tuned length intake and a potential fuel injection setup might make up for reduced horsepower versus the hondas and VW's that're competitive in class. If an in-tunnel exhaust could be fitted, the car could be lowered to extreme levels (even requiring shortening the rear bump stop to get enough bump travel). I drag on everything with my 2.25" flanged exhaust and 1.5" or so lowering. I can't imagine 2" lowered. I generally don't hit the stops on course, however, so I've got enough bump travel at the moment.
As to updates/backdates, the rules read "as a unit" so you can update the bumpers. As long as significant material removal isn't inolved, I think chrome bumper backdating would be ok. I'd have to re-read the exact wording, and it'd be wise to have an argument already prepared in case of protests. For instance, "backdating" the top (removing it) might be ok, as long as the officials didn't know that Midgets (sprites aren't listed on the same line with midgets, so you have to limit your backdating to within the realm of midgets, bugeyes aren't a candidate) with removeable tops actually have a slightly different body construction.
There's plenty to develop to make the car competitive, but I feel that you're inherently limited by such an old chassis. Even though I prefer RWD, the SCCA seems to put them at a large disadvantage to FWD cars. Also, newer vehicles generally have better performance 'out of the box' than our old hardware. However, it can be made to perform. Plus, it gets tons of attention due to the uniqueness of the car. Just about everyone who I meet when I'm co-driving the MR2 says, "don't I know you?" "Yellow MG Midget" "Oh, yeah!"