WorstFriend I believe it's from unequal length exhaust headers specifically, but the entire exhaust setup probably plays a part. Sounds like it's exactly what you're looking for then ^^ I'm not actually aware of any other Japanese makes that did rally stuff... maybe Datsun/Nissan? But you'd probably have to go considerably older. I'm not super into the bug eyes personally, I quite like the facelift model, and the previous gen.
How did you find doing brake work? I've never done any, and it seems like a scary prospect ^^'7 Funnily enough, the washer pump for my E36 is also broken (well, it just leaks) - can't remember if I meantioned it in a previous post. Got a new bootleg one ordered.
Is your reverse light not turning on? The obvious thing would probably be with the wire or connector(s). Should be able to diagnose it with a multimeter, assuming it isn't super awkward to get to.
The "doorsteps" I think are called sills in English. The part in front... the wheel well? Both pretty common places for rust. Hopefully you or your dad can weld!
Just a plain electric conversion would probably be a lot easier than turning it into a hybrid... but turning it into a hybrid would be bloody awesome! You'd probably lose most of your boot space, and you might need one of those anti-wheelie wheel things dragsters have, but it would be awesome! Ultimately, if you have a place to do the work (most difficult thing), then if you're willing to learn, all you'll ever have to pay for it tools and materials, which are all far cheaper than labour. It really sucks if you're at the mercy of the outdoors though.
A rally build is probably the most expensive thing you could aim for. Rally cars are cool, but they go through one hell of a beating. It's no wonder there isn't much talk of rally in amateur circles... or at least I haven't heard much ^^'
220kW will be a challenge. I'm pretty sure I talked about it in a previous post, but it'll most likely involve replacing the intake with ITBs, a more aggressive camshaft, exhaust mumbo jumbo, and a lot of luck ^^'