I would still say with $12.5k keep the wagon as the reliable daily driver and get a project car like an old impreza. I've spent a total of 9k on my 94 so far. The 9k includes the 02 WRX engine swap, Link engine management, used Compaq Armada, some gauges, LM-1 wideband O2 sensor, new ACT clutch, AGX struts with prodrive springs, downpipe, borla cat-back, and also the car...so I think for all I have done it has been pretty budget...not to mention on the WRX stock power it can run high to mid 13's...
Now I have my FMIC waiting and the RS bumper is on the way
now I need a bigger turbo