Are there still some magnesium VW blocks (I think it was the blocks) out there? That might help.
Are the Verner engines any good? The 3 cylinder radial seems suitable. 34 continuous hp at 2200 rpm, according to them. I guess it might be harder to find parts than for a VW.
All factory VW Type 1 blocks are magnesium. There are some after market aluminum Type 1 blocks that weights 17 pounds heavier.