K series or zetec for midget?.

Agreed and this is even more relevant for the car in question I think.
Planning to go the way with an MGB myself.

Have a read of this site - kengine.dvapower.com/

K-series every time. They're cheap as chips because everyone's terrified they'll pop, extremely light (~80kg bare, nearer 120kg for a Zetec) and easy to install due to their size.
The HG failures are down to a few (silly) faults and errors that are easy to overcome;

- In the true 1970's BL penny-pinching style that saw Rover's products go stale and the company go pop, they deemed the original steel 'head locating dowels to be too expensive, and replaced them with plastic. These get soft as the engine gets warm and allow the head to "shuffle", destroying the head gasket. Later HG kits were re-specified with steel dowel and this problem disappeared

- Overtorquing the VERY long head bolts causes the material to stretch beyond it's elastic limit, and so not effectively clamping the head down. Reusing the bolts also gives this problem.

- The standard thermostat is located at the coolant INLET on the block. This is to allow quick engine warm-up time for the small, lightweight town cars (read, Metro) the K was designed to pull. The major K HGF problems seem to occur more frequently in much heavier cars, the lightest being the 200/25 and the heaviest being the Freelander (It almost seems to be a pi$$take the K made it into that car, but penny-pinching again perhaps?). This extra load on the cold engine means the engine warms much quicker than intended and the coolant system doesn't have long enough to gradually warm from the thermostat bypass, then when the 'stat does open a charge of freezing cold coolant gets dumped into the block. If you understand the principle of thermal shock, you'll appreciate why the head then warps - a bit like sticking a red hot glass in cold water. An aftermarket thermostat housing from QED or some creative DIYing can solve this.

The K is leagues ahead of it's contemporaries, a credit to latter day Rover and proof that when they sat down and paid attention their products (or certainly Poertrain's) were truly world class. What a pity it was the accountants that got the last say and not the engineers.

Buy the best engine you can afford, use the latest genuine Freelander HG kit and stiffer ladder rail, relocate the thermostat and you will have a good, cheap and reliable engine.

Another link - www.aronline.co.uk/index.htm?essaykseriesf.htm
It's heavy reading, but gives some very well reasoned arguments in the K's defence, as well as much insight into the engine's (unjustified, IMHO) fragile reputation.

they spin the wrong way for the rear axle, they spin counter clockwise and the rest of the worlds engines spin clockwise.

or so I was told.

Not the S2000 engine. The other (FWD) Honda engines do spin the wrong way (and face the same way as an original Mini engine - unlike other FWD cars).

And clutch plates ,release bearings, spigot bearings, starter motors.....

Only one bush and a starter, both standard ford parts, available cheaply or second hand.
The 1.8 zetec clutch plate and release bearing can be re used and needs no bell housing (this alone costs £350 for either the A or K conversions and the other parts are only available through one company allowing them to charge a premium).