Changing to a single prop introduces a LOT of torque that was designed OUT, necessitating a LOT of change, especially to the fin and rudder area. The plane is too small for a Merlin ... there would be NO PLACE for a pilot. It weighed only about 500 pounds more than a Cessna 172! The landing gear would never be able to cope with a Merlin prop. The entire airframe is WAY too small for a Merlin, Allison, Hispano-Suiza, or whatever in a big-displacement V-12.
C'mon, get real. This will never be a fighter and hasn't actually flown yet. I think it would fly, but not with a major off-the-cuff redesign without ever looking at the ramifications of the proposed changes.
The empty weight was 3,085 pounds and Merlin is 1,400+ pounds all by itself without the radiator. The Bugatti Type 50 engine was supercharged to eventually make 250 HP in cars, but the 50P was reported to have 450 HP. How many engines YOU know of can double their power output with no change in displacement? And still remain reliable? Huh? The Merlin did but I wonder did the Bugatti 50P engine got the same engineering attention the Merlin got? Ettore Bugatti didn't HAVE sir Stanley Hooker to design a supercharger or intake track and wasn't well placed in the government to get 130/150 fuel when the 100p was designed.
If it had 250 HP each the sum would be 500 HP, and a 500 HP Cessna 172 would definitely perform better ... but 500 mph ... I have my doubts about this thing from the start, but think it would be fast for the size and real power. Bugattis aren't usually associated with slow slugs.
When and if the new build unit flies and survives, we'll hear about the performance and flight characteristics ... with the benefit of modern knowledge. I'd bet you almost anything that the props used on the new one will be better by a considerable margin than the props on the original. I'd bet the finish is better, too, assuming some competence.
The potential for power HAS to be better. A 4.9 liter engine today can produce prodigious power if done correctly. Mine did. I got 650 HP from a 5.0 liter V-8 easily. I don't still have it and wish I did ... but my 5.6 liter Camaro makes 325 HP and has done so for 70,000 miles. Last dyno was 326.5 HP at the rear wheels. So the power is easily possible, even unsupercharged.
Was it possible before WWII on pre-WWII gasoline? I don't know and will not hazard a guess. But I think for an aircraft engine turning 2,500 - 2,800 rpm ... no. I don't know the specs for the Bugatti type 50P engine, but I suspect it was 5,000+ rpm and would not want to be flying that before WWII if I wanted to live. The metalurgy wasn't that well known for durability at those revs ... at LEAST for a service fighter.