Yes, these are highly desirable collectible cars among Volvo aficionados.
The prices are not up there with some of the other European cars but a
nicely restored example will fetch a fair amount. If you do a really top
notch hot rodding job it could be a cool car, I'm into the stock look myself
though.

The cars are valued higher than other Volvos of similar years, but I
wouldn't approach this car with an idea of fixing it up and making
money.

Sounds like it needs a lot of work and time to sort it out, and there
are better cars out there to fix up and flog on the market, IF your
desire is to make money.

BUT, if you like the car and plan to keep it as a driver, go for it.

Hot rodding it would be OK, as people have been putting small block
V-8s in 240s forever.

Here's a link you might find useful...

http://www.ipdusa.com/classifieds.asp?CLC_ID=12

In factory spec condition yes.

It would not be a travesty, and could result in a fun and useful car.
But it would have value only as a parts car for Volvo collectors.

Whether to do it or not reallly depends on your reasons for getting
into this.  If  you are looking to build a sleeper hot rod that you
can have some  fun with then go ahead.

The resulting car will  have value only to those with an interest in
Volvo P1800ES cars with high performing Honda motors.  Even in
pristine rebuilt condition I  don't see a car like that appearing on
Barrett-Jackson.

You've got a very narrow, shallow engine bay on a full unibody...even
the front fenders and inner fenders are structural. It's a challenge
to get anything to fit in there, though it can be done, even a Ford
302.  You can get a very streetable Volvo B20 ( the original engine)
up to about 160 BHP (normally aspirated) fairly cheap compared to the
cost of fitting anything else, even a B21. There are a few
supercharged B20's out there too, up over 200 HP. Doesn't sound like
that much, but given the weight of an 1800 ( even the ES), it's an
inspiring power to weight ratio, with a really nice front to rear
distribution of weight.

But all said, it's your car and your choice.

Check out   http://vclassics.com/mppe1.html for some ideas of a
normally aspirated B20, and http://1800philes.com about a very sweet
supercharged, Megasquirted B20. Finally check out
http://autos.groups.yahoo.com/group/1800list/ ( you'll have to join)
to hang out with the Volvo 1800 bunch. It's a really great group, with
lots of good info, not too much bad blood, and little spam. These
engine swaps have been discussed many times over, so there's lots of
good info  to make your decision with.

Ron

Ron/Champ 6

1963 8E5 Champ (Champ 6)
1995 VW Passat (Vanilla..yuk)
1994 Volvo 850 (Tilley)
1968 Volvo 122 wagon (Buster)
1970 Volvo 142 (Musturd)

   I generally agree with the other replies. The S2000 motor might not
be such a great idea, though: IIRC this engine has to really scream to
make a lot of power, and in a heavier car like the ES it might actually
seem slower than the B20E motor in normal driving. I say get the most
power from the Volvo engine.