Hey Matt!
All the advice given here so far is good. Having done this exact thing in the past here are my tid bits:
1) One thing that may influence your decision of 998/1098 vs 1275 is brakes. I could not find what type of brakes Mini City E's come with up front. If it's drums then going 1275 may be an issue for you to get MOT or whatever. If you are running discs then no worries.
2) Here changing engines requires inspection and certified clearances to change your engine number from what it is now to something different. The law here is that you have to have a receipt for the engine block you have purchased in order to transfer it. Laws may vary over there so better to research this ahead of time as it is all extra costs basically.
3) If you are going to build an engine from scratch on a bench before lowering it into the car then yeah as others have said, the amount of money you need to spend to rebuild an engine you may as well invest this into a 1275 as the costs for rebuild will be about the same more or less. You just get more bang for buck on 1275's
4) I'd stick with SU's and a good intake manifold and exhaust manifold to suit. You'll get plenty of hp out of a single HIF44 and they are cheap to find, rebuild and fix.
5) From memory throwing a 12G940 head onto a small bore block isn't exactly straight forward. The amount of money and effort required to do this may be better spent on porting and installing bigger valves on a small bore head, which you can still get plenty of power from if you find someone who knows what they are doing.
6) Cam is a very important consideration for making power
Read this (3 parts) and absorb as much info as you can!
http://russellengineering.com.au/projec ... gine-pt-1/Good luck!