Ok I'll add my 2 cents. Lighter, more powerful, improved handling, and long as it doesnt take away from the ability of the machine, go for it. Another way to define it is to take a machine, and make it perform bether than it was ever designed to. To me at least, the spirit of a cafe racer isn't so much about the iconic look as it is the function. If you like it, and it improves something, go for it.
As far as what motor, I think thats up for debate. I would pose the question best motor for what? Different designs happened for a reason, pretty sure it would be for some kind of benefit. I will honestly say I choose motors based on the sound. It's not a practical reason, but if I'm going to have to listen to something loud for a long ride, I better be enjoying it.
Also, I like to build things that are less popular, but there are enough parts out there to get it done. I'd rather a cb350four than a cb750four just because less people have done it. That, and to me, while doing the larger displacement bike is fun, if I'm only building for performance, well I can go out and buy something brand new for less money which will outperform anything I can create.