A TDI conversion should be pretty easy as there's no ECU to worry about.
A 200Tdi is a very different engine to a 300tdi and most parts are not transferable. Having said that, they both perform very similar.
I think the aim of the 300tdi was to be more refined, but to be honest I can't tell any difference. I've owned both and been in loads of LR's with both engines.
Both make very similar HP/tq from the factory although the slight favour of the 300tdi.
MPG is more open ended, however I would say my 200tdi is more economical in a bigger heavier vehicle than my 300tdi was.
I had the fuel pump tweaked on the 300tdi, in a stripped 90 Defended 5 speed. Driving hard I got 21-23mpg (imperial not US gallons that is).
My 200tdi also had the pump tweaked but I honestly beleive it was more like 24-27mpg. But the driving style and conditions where better in an economy sense. For comparison a 3.5 V8 Range Rover would probably do about 12-15mpg under the same conditions.
Power wise, you'll want a BIG, sorry did I say BIG intercooler and mess with the fuel pump. 200tdi's also require the turbo boost upping as they run lower than 300tdi's. You can go further with bigger water cooled turbo's but it gets far too pricey for the gain IMO.
160bhp is about the max, but it will be 220lb ft plus. Not staggering numbers however it will drive better than the numbers sound. This is because it makes all this power from low revs, like PEAK torque under 2000rpm and will hold the power well until the red line. A cammed V8 will have to use more revs to achevie the same power.
In a drag race your modified 4.0 V8 will be quicker, but on the road I think you'd be impressed with a modified tdi.
300 tdi's are generally easier to find, because 200's where only made for a short while. So parts/spares might be a consideration.
The TD5 appears to be a great engine. In stock trim it's not that much more powerful. Especially the ones in the Defenders (de-tuned by ECU compared to Discovery 2 TD5's). However they are all electrical and swapping one over would be a massive undertaking. Stock Discovery TD5's have ~134bhp but modified ones get upto around 193bhp with a chip and intercooler.
BTW - stock Tdi's are pretty sluggish, espcially most 200tdi's. If it doesn't blow out black smoke then it isn't going to move very fast.