Well, for one, you need to make sure all the air is out of the cooling system. There should be a bleeder valve near either the thermostat housing, or where the top radiator hose goes into the engine.

Next from there, you need to check, and recheck that all the timing marks line up, with the timing belt tight. If not, re-set until it does. Setting the timing with the timing belt loose tells you nothing.

After that's taken care of, set your valve lash. Don't trust the machine shop settings. If the lash is set too tight, it will cause the loss of power you described.

Once the timing is set right, the lash is set right, and all the air is out of the cooling system, you shouldn't have a heat problem.