1. Obviously, a viable alternative. I just don't think it should come in at the current 25-lb penalty, and then cause everything else (iron head or Zetec) more problems.
2. That was just an (albeit, an isolated one) example - he WAS at least a second faster than anyone else, and if his motor were not VERY good, it wouldn't matter who was driving, or what other tweaks were done to the car. In addition, it is fairly well known that even average Pinto engines have several more peak HP above 6200 RPM. The Zetec in its current form, peaks at ~6000, and after that the Pinto is definitely superior.
The main reason I mentioned Niki, is that he would have won if he hadn't broken. What people tend to remember is that two Zetec-engined cars finished 1st and 2nd, not that Niki was the class of the field.