Yes, you can use up to 40 to 100 hp worth depending on base tune before the engine explodes. Honourable mention, a blue Sprectre Performance TBI 1970 Maverick 200 cube, 15 second quarter mile, see the Classic In-lines pages. Another guy in Australia does 13.5s with a stock 200, just a 500 cfm Holley and a 100 hp nitrous shot in a 1962 Falcon
If you turbo charge your 200 with about 14 pounds of boost, and strip out the extra weight in an already 2600 pound Mustang, you'll do 200 hp as well. Our member Linc200 ran at 13.5 seconds of 1/4 mile in his 84 Stang with 82 I6 conversion. More than that, the pistons will then pop, the car will stop, and the jaws of the crowd will drop, and your budget will then have to prop a rebuild.
With good leakdown from stock pistons and better fuel delivery and a stratergy to keep out of detonation, a 200 six could foreseesbly do 11 second quarters for 1000 runs without major tear downs like the Aussie 3.3 and 4.1's do.
Generally, rebuild any stock 87- 97 hp (120 hp gross) 200 engine with better cam, head, reduced advance ignition curve, and then add 1.47 times its power in nitrous. So if you used, say, a Classic Inlines head and got 200 hp with a 465 cfm 4-bbl and 274/274 Clay Smith cam, you could then go up to a maximum of 294 hp with nitrous. That's almost a 100 shot. If you keep it stock, then 87 hp becomes 127 hp, or a 40 hp shot