yar jugaar kerne ke to her cheez possible hai, lekin if we think over it, producing 2 engines in the same car same power category, is totaly not cost effective (even in thailand where its being done)
About the resale, If this car comes in the same price range, (with the 1.6 zz-fe (se-saloon)) its going to be a super dooper hit, ul get the additional power required, Ul get an auto variant (optional) people buying the auto City would consider buying a catchier auto Corolla.
Yes the added fuel consumption would be there, as to my knowledge, the 1.6L gives more or less the same fuel economy as the 1.8L.
As for the 2.0 variant, Its expected when ever Honda comes up with a newer car, its going to be a 2.0L, So maybe Toyota waits and launched the 2.0 Petrol later on.