the engine itself can handle quite a bit more power.

Remember that "higher boost levels" isn't exactly what you want. You want more CFM of air. A larger turbo with the same boost level will product more CFM resulting in more power.

A larger turbo with higher levels of boost will do that much more. 500 whp is easy for your engine, but your transmission won't stand up to the task.

 

If you really want 500 hp, just save up a whole lot of money and do everything at once. You can only nikcel and dime your way up to about 260 pump gas wheel horsepower before you have to tear everything out and start over. If 330-350 crank horsepower is sufficient, you can get there by doing one mod at a time.

And yes, don't count psi when looking for horsepower, look for ways to flow more air and burn it more efficiently. The former means a larger turbo and the latter means engine management. In order, this is what I would do with a stock WRX:

-uppipe
-3" turboback, preferably a single consolidated system like the Vishnu exhaust
-engine management, such as a reflash or Xede. I do not recommend stand alones for daily driven street cars.
-larger turbo, which will require injectors and a fuel pump as well.

There are other minor changes to make as well, such as spark plugs, silicon hoses, pulleys and the like, but that's the major itinerary. Remember that when it comes to WRXs, you get what you pay for. Typically, the more you spend, the better quality you are getting.

 

(the Hijack begins) BanSuvs why don't you recommend standalone EM, i thought this would be better than piggyback EM's(Hijack ends have a nice day all )

 

A rebuilt tranny with dog cut gears and the 6 speed tranny will hold it. other then that, be prepared for a lot of rebuilds.

Agreed, agreed, disagree, and agree; don't forget a better FPR as well.

I wouldn't recommend YOU putting in and tuning the standalone, but if you have someone who knows what they're doing it for you, then you'd never notice a difference.