ls vtec's are fun. i wouldnt bother with the type r stuff. if it has front and rear disk then just upgrade your pads rotors and brake lines and dont forget to flush out your brake lines for new, good stuff. is the motor smoking on decel, accel, sitting still what? just tearing a motor to pieces because it smokes a lil may not be the best option if you got to drive this thing to work and or school everyday.
post up your leak down and compression test. and go from there.

a turbo b18b would be plenty of fun. with a power goal of 250, id say go with super 60 t3 turbo. pretty sure there rated for 300 and it will spool very quick with a b18.