Chubs , you may have said your cutting the diff to suit which it will but have you looked at skyline diffs or old Chrysler Centura as they are very close to Capri width. . Still a borg warner so parts swap is plenty available. . Just a Thort !

I hear that the Centura is slightly wider hadnt thought about skyline
 

As all the comments above .. it's all been done before.
I've seen that currently listed Tiger Mica mk2 a couple years ago at Heathcote drags. Had a chat with the builder .. and although it goes well and I respect what he was trying to acheive I'm personally not a fan .. too much Holden in that thing for my liking!!
Having said that .. it's good value at the current price around 2k. Sell off some bits and rebuild as you like .. ?

Just a quick bit of an update i managed to track jim down and had a yak to him, very knowledgeable in this field,
I'm just in the process of doing up a project budget and a plan, hopefully i will be able to do all the prep out of the car then flip it in a weekend nothing ever goes to plan though
Will keep posted 
a few q's to get me by
1. With a minitub job (squared top tub (no actual chassis mods)) what's the widest tyre can be fitted also the largest with standard tubs
2. Has any body got a capri diff cheap or one that i can borrow to send in with the m78 so they can use it as reference for spring mounts etc?.
3.has anyone had experience good, bad or otherwise at a shop that does diff and axle shortening? I'm in Albury/wodonga but frequently go to Melbourne so anywhere in between would be great! 
4.When i do start the project should i start a new thread or just continue on this one? 

A picture of Jims i hope he doesn't mind me sharing

Don't do a V6, Go LS1.
http://www.yellowbullet.com/forum/showthread.php?t=470627
 

If i had a compete ls in stock that's what i would be doing

One of our newer club members has this under his Capri bonnet, but I haven't had a peek yet.
he gave up trying to get more power cheaply out of his Essex V6, and then there is the 5spd......

I would be keen for a chat and/or pics,