You can put a MC16 bottom end into an MC18. I've done it. Twice.
Once with a complete MC16 engine + MC18 heads, the other with a MC16 bottom end with MC18 barrels

Mounting MC16 engine into MC18 chassis
While I think of it, to fit the MC16 engine you will need to grind about 8mm off the clutch side of the rear engine mount and grind the torque arm off flush. (Easier to grind off than make a spacer for swingarm to remove it) Engine/frame work perfectly well 'semi' solid mount.

This I was told by a chappie who'd done it before. I cut the material off the engine mount with a disk grinder and file, and solid mounted the rear,
I didn't bother cutting the torque arm off, which is I think where your "Lower left engine mount" is. Is it attached to an arm off the swingarm? If so, it is the torque arm. The chassis I used was a 1989.
I did have to make up some other spacers if I recall right, but they were more of a hacksaw and file and drill job.

If you're going to use MC18, PGMII electrics, the MC16 PV servo runs the wrong way. I found this out the hard way. And you need the MC16 PV servo to run the MC16 PV's.
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The Chopster