there are so many variables to a "reliable 550-600hp" beyond the engine. a truely safe 550 can be done on a stock bottom end without issue but will take more air than the stock turbo gives, injectors that are in the 1300-1500uS range at that power level (1100-1300 would be ideal), cp3 to support the fueling, and all the other little details that go with. Then it comes down to you actually keeping the power at 550 and not wanting to up it for more.
if your lb7 engine is in good health, i wouldnt touch it. if it needs a rebuild, id put new lb7 pistons in that are delipped (you will most likely need a bore over to get piston to wall clearance right), lbz rods, have the crank checked and rotating assembly balanced, key the crank and cam and maybe replace a few other things depending on mileage. that combo will hold 600hp all day long on a proper setup (air/fueling/tuning)