If you had the tools, knowledge and/or the money, it COULD be done. But with enough money anything could be done.
A small kink in this plan is that the V160/V161 doesn't have a bellhousingin the traditional sense. The bellhousing is part of the forward section of the transmission case, which I'm sure would make your task quite difficult.
If someone REALLY wanted to do this, and I mean really wanted to, and was prepared to pay $8000 to go the whole distance, this is what I would think needs to get done:
Make an adapter plate that bolts the V160/1 onto the M bolt pattern, mating the trans directly to the block. Get a kick-ass clutch for a 2JZ and an aftermarket flywheel... but make sure that the flywheel manufacturer doesn't drill the flywheel bolt holes for a 2JZ, they need to do it for a 7M, which is a weird pattern (6 bolts {JZ is 8} with one bolt offset 15 degrees from the regular 60 degree spacing, if I recall correctly). Your adapter plate will have to be a specific width to accomodate the input shaft length on the V161, whatever that happens to be. Should the shaft be unexpectedly short, you're probably hootched because it won't sit properly in the pilot bearing, if at all. Speaking of pilot bearings, you'll probably need a custom one.
This arrangement will let you use a clutch intended for the V160/1 and give you only 1 (and a half) custom parts, the modified flywheel and adapter plate.
Then you have to pound the ever loving shit out of your trans tunnel to make the behemoth of a transmission fit into the MkIII chassis, have fun. The shifter linkage is WAY WAY further back than you'd expect, relative to an R154, so be prepared for some gimmicks to make that work. THEN you're likely to need a pretty retarded driveshaft as that I believe the V160/1 is significantly longer than an R series... so the D/S will be real short, and probably one piece.
But, now we're back to the gear ratio thing... so really, what was the point of going this far? The car will be balls to drive unless you somehow come up with a ton of coin for someone to make you a ring and pinion that will stuff into an 8" MkIII pumpkin that's 3.22ish (I don't even know if this is feasable or possible, but with enough money anything is possible). Or you could fab a MkIV subframe into a MkIII, it's been done twice that I know of and works pretty well... but costs an arm, leg, and a kidney (or if done on the cheap will come apart and you'll die horribly in a fireball). As a bonus, you'll get a BBK on the back end for free!
Or you could do what IJ did and put a custom pumpkin, like a Ford 9", in the MkIII subframe and select your gear ratio as you please.
There's a guy in Edmonton, Alberta that did the V161 swap into a MkIII with a 2JZ. His opinion of the finished product is that it's a novelty and was totally not worth the money he spent doing it
.
He regrets not going T56.
