Knocking-out the cat won't do anything; it's not one of the awful ones from the 1970s and it's not the bottleneck.
Unfortunately the 2300 needs a lot thrown at it to make it compete with really any of its 16v contemporaries. The applicable 16v Volvo head was only made for a few years and it's a ton of work to make it work.
If you really, really want another 20hp without having to fudge a bunch of things or go turbo, a '98-00 Ranger/Mazda B2500 engine might be an option. It's going to be OBDII and probably a wiring project though.