There was a fairly large discussion on this recently. Try doing a search. I think Simon from Prodrive stated that anything over 280hp in stock form will cause problems. A fully tuned motor is capable of more, but there is no set MAX hp limit. After a certain amount of power, your performance becomes hampered by other mechanical items such as axles, transmissions, etc.
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That is the Tony Rigoli Performance WRX that just recently ran a 10.04 1/4mi.
[EDIT] I forgot to mention that this WRX is stroked to ~2.2L
[This message has been edited by stimpy (edited February 12, 2001).]