almost anything will fit, it's all on the amount of money you have....
I've seen 3 rotor's in them, V-8's, SR20's...but the popular engine is the 4AGE...built up, and heavily modded...
if you want race car...and drags...then get a lighter honda, and slap a bigger engine in it.....
if you want drift, then the cheaper 240SX is better for the upgrades department....
The AE86 will be a money pit, you will dump money to get it, you will dump money to swap the engines, and then more money to get it built up right.
My AE86 was $1400, as a running SR5, the swap was free, or to the exspence of an even trade for a blown head gasket on the old supra I had, and all the other extra parts I got or dumped money on...well went into the high dollar area...
and all the beer I consumed to do the swap would supply a German beer festival.

joint....