Note his 50 years of experience... He was a mechanic for these cars for half a century and he is used to being the guy you are looking for, so have that perspective when you take his advice.
It is true that when you go to upgrade an engine, you have to adjust/change EVERYTHING! From the intake side to the exhaust side and all of the internals. Unfortunately, there are so many combinations that could work and inevitably, some parts get over looked, excluded or misadjusted. I am by no means a horsepower guy, but if I were looking for more, I'd talk to Ed at Ed's Foregin Car Parts down in Gadsden, AL. He is used to the buggy guys wanting big engines and he knows how to make them work. I know he is particular about what he works on, but its worth a shot if you are willing to drag it down there and he is willing to look at it.
Good luck and I hope you kept that stock 1600 in the garage so you can tear it down and rebuild it/ reseal it for not much money. You'll learn a lot and if you get frustrated with the big motor, it's a really easy swap on a Baja! There is a reason a lot of people are running a stock engine...