You're all trying so hard to think of why you can't do it and not how to do it. You would all do very well in big companies.
350 would be fine from the regular WRX but the STi needs more wow. Much more. Just because the turbo engine they put in regular people movers doesn't make that kind of power doesn't mean a premium car like the STi can't have one.
I think Suburu can do it but likely they won't try either. The competition doesn't have that much power so why should we? What's the point in trying to be better?
Some of us (like me) work in automotive engineering. Some of us (like me) have built crazy engines. Some of us DO know what we're talking about, believe it or not. I mean...hey...I'm all for you thinking big. And I'd love to buy a car with the specs you're tossing around. I think it's great.
But you want to have a car that's 500+ HP and that the kids can still think of as their dream car? Oh..and for no more than $50K. With a nice interior. And an AWD system and driveline that can stand up to such power and the abuse that will come with it. With full warranty, of course. And that will last beyond the warranty (hopefully).
Sure, it can be done. But not for $50K, that's for sure.
Please share with me how it can be done since you seem to have the answers. I'm all ears, and I'm always eager to further my knowledge in engineering.