Yes the 27hp will be just a lil too small. Now 35 with enough torque would be good enough. Again no speed records, but I would need to verify that the particular engine can be configured for such reliably. I think the correct engine choice will be a Mercedes, the smaller the better.
Now 27 hp in my other XJ, 94 XJ600 Yamaha motorcycle might be perfect

 

Benz OM617: common swap, flywheel adapter plate and other goodies available, will burn anything of the right viscosity (biodiesel, WVO, WMO, ATF, probably vasoline thinned with gas lol).

VW TDI 1.9: awesome power and economy like DieselD mentioned, electronic, high fuel pressure system responds poorly to alternative fuels. Works but less forgiving compared to ancirt mechanical rattlers.

Cummins 4AT: rare and gutless, but pretty cool, check out https://www.cherokeeforum.com/f46/di...j-swap-149975/

Isuzu 4BD1T: Does alright on alternative fuels, mechanical injection. Found in GM cabovers

Check out www.4btswaps.com


Unless you were getting things for absolutely free I wouldn't really consider any engines other than the above. All pretty much stock replacements or upgrades

 

You can never have too much fun power>
HA-HA

 

I will say I have a 1989 Chev 1500 Ext long bed with stock size tires, and a 6.2 diesel. It is as fast as a worn out 305 gasser with better mileage and they only came with what 150 hp or so, but will maintain 80 plus mph

 

My 110hp Yj with the 4.2l and carter carb will cruise at 80 all day long.


My 95 Yj I had was a 2.5l with 4.88's and 35's it would cruise at 75 with no issues.