Hi, am new to this forum. I have a 1996 Imreza turbo and am looking to build a replacement short block so I can perform an engine change. I have a complete 2000 Legacy GTB engine that i was thinking of using as a starting point. Both engines are EJ20's will I have problems if I use this, and what internals should I use if I am aiming to get over 350BHP out of the engine??

 

IMO, you would probably be better off starting with a Closed Deck from an early WRX or Legacy turbo

AFAIK, the GTB used an open deck like the later Impreza

 

Any EJ20 engine will do as a short block. It is a myth that you need a CDB. Standard WRX internals are good for the power that you want but you could go for STi rods and pistons if these were available. If this is a budget project then it will really depend on what is available to you in good condition.
You can swap your heads and inlet manifold with ancilliaries or you an go out and find other heads if you want to do gas flowing and porting.
Phase 1 and 2 Classic cars were on coil packs.
Phase 3 and 4 were on DIS as was phase 5 and 6.
Inlet manifolds phase 1-4 are interchangeable and 5 and 6 are interchangeable but you cannot swap 4 for 5 inlet manifolds or 3 for 6 etc. etc.
Phase 1 and 2 are hydraulic cams as far as I know but from 3 onwards they are solid. WRX has shims over whereas STis have shims under bucket hence the higher rev limit.
The head castings for each Phase are, I think, the same between WRX and STi and any difference can be taken car of if you are doing head work anyway.
Really it depends on what is available to you and what you are aiming for but 350 bhp is easily achievable.
I hope this helps.