Tell me why you think it wont work... then tell me why you think it will work... I wanted to go for more.. like a 2.5 or 2.4 but the whole sticking to the same overall system voltage per engine has me limited without swapping out the entire system. oh and i've gotten as far as... The main issue with putting a Gen 4 Prius engine into a Gen 2 is the crankshaft and camshaft timing signal. Even though the Gen 4 sensors have the same tooth count (36-2), the signal they output is different — voltage, timing, and waveform don’t match what the Gen 2 ECU expects. Because of that, the Gen 2 ECU can’t sync timing properly and won’t run the engine unless it gets the exact signal it’s designed for. That said, most of the other sensors (injectors, coils, throttle, etc.) can be reused from the Gen 2 and installed onto the Gen 4 engine, or adapted pretty easily. So really, this crank/cam signal is the only real barrier to making the swap work with the Gen 2 ECU. If we can convert the Gen 4 sensor signal to match Gen 2 specs, or swap in Gen 2 timing wheels and sensors, everything else should fall into place. all other that's needed is a simple for the most part to resolve with a 3D scanner and certified accurate digital calipers.
The Gen 4 engine has an electrical engine water pump. The Gen 2 has a mechanically driven pump. How are you going to control an electrical engine water pump in the Gen 2?