The stock T25 turbo is pretty much maxed out at 220-250 wheel horsepower. The EVO III 16G turbo maxes out in the 320-340 wheel horsepower range. (both on pump fuel)
Before proceding, let me mention that you will need an upgraded fuel pump and some sort of fuel control to use the 16G to its full potential. A Walbro 190 is plenty for this upgrade and most have been successful with using a SAFC to control the fuel. Many say 550cc fuel injectors are large enough for this turbo, but most recommend to just go with 660cc injectors from the start.
Before you even consider upgrading the turbocharger on a 2G DSM, you need to have upgraded your plastic upper-intercooler piping and blow-off-valve (BOV). Otherwise you will be leaking off boost pressure around 12psi. You will not need an upgraded intercooler at this point, but it is not a bad idea.
This is what I'm planning to do. Deleting the cooling lines really simplifies this upgrade. PLUS the stock cooling lines dump the hot coolant back into the cooling system right before the cylinder head. Thus heating up the head when you really need it as cool as possible. (while still staying within the proper operating tempuratures of the cooling system and ECU.)
For comparison sake, here are the normal 16G install instructions:
If you use my plan, you can get a brand new EVO III 16G installed for $685. If you went with an install kit it would cost roughly another $150 ($835). Instead, put the extra $150 towards an EVO O2 housing, a downpipe, an EVO exhaust manifold, etc.