Hi Mike- As you well know, any changes are going to cost money. Let's start with the easy ones-
First- as has already been mentioned, for an easy power increase throughout the rpm range, raise the compression. At 8:1 with 52.5 cc combustion chambers the engine must have up around .060" deck height. While those numbers work, a .015 or .020" drop in deck will up the compression to 8.5:1, make the engine more efficient, and may even run a little cooler. The increase in power won't be earth shattering, but will be felt from idle on up and be good for mileage as well. That engine also needs a set of solid bolt together (no spring washers or circlips) rocker shafts- it's only a matter of time before a washer or circlip breaks, and that could spell disaster! And at that valve lift (.430"?) some elephant's foot adjusters would be easier on the valve train.
I would NOT put Panchito heads on a 1776 that doesn't make power above 6,000 rpm. The small gain you'll get in the top rpm's doesn't justify the loss of airspeed (and fuel dropping out of the mix) through the intake ports the engine will experience in the lower part of the powerband. This loss will translate into an ever so slightly soggier bottom end/ low midrange (where we do 95 or 97% of our driving), which you may or may not even really feel, but the resulting (albeit probably small) mileage loss will tell you the combo isn't optimal.
The heads look like they have stock combustion chambers with shrouded valves and no port work- how do the intake manifolds line up with the intake gasket holes? If you are looking for more power (and to spend a little more money), a set of properly ported 35 (or even better 37) x 32 mm heads would be a better choice. Ported 35x32 heads will support 120 hp (and I imagine another 5- 7? hp with the slightly bigger intake valves) and will retain all the drivability stock heads deliver. At this point flycutting the heads to 50 cc combustion chambers will give 8.9:1 (.040" deck) and still run on 91 ron (premium) gas. As Gordon mentioned, those look like 1.1:1 rockers- on 1.25's usually the pushrod cups are drilled noticeably closer to the inside edge of the face, but hey, we could be wrong (ask my lovely wife- she'll tell you it's not the first time!). VW 1.1:1 rockers have 2 raised lines on the forging. With a 1½" exhaust and 1.25 rockers (which will add 4-5° to the dur @ .050") the engine should rev to 6,000 rpm with power. I'm told (by someone who's information I trust) Kadron manifolds with ¾ of the center divider ground out will idle as nicely as Webers/Dellortos.
Hope this helps. Al
@Stan Galat- retarding the timing for better power above 5,000 rpm is an old drag racer's trick.
PS- Do the Hoover mods- you'll be glad you did!