Yup...I had one of these and it was a blast. A flyweight underpowered blast, and I couldn't wipe the grin on my face. About 1750 pounds, short wheelbase, rear-wheel-drive, and 50mpg on the highway.
They are a bit of a period piece. In other words, don't expect it to be refined or modern by 2008 standards, but I would rank one above a Pinto, Chevette, GLC, etc. Great base for a project. In Finland they build them into rally cars which can run with most anything else 2WD, and in the Carribbean and on the East Coast drag scene people build them into 10 sec/9 sec/8 sec. doorslammers!
4A-G and rotary are the popular swaps. The stock K-series isn't the best candidate for heavy tuning, but can be fun with a tune-up, carb, and exhaust. I always wanted to fab a manifold for some individual motorcycle carbs and try that with a mild cam and a bit of porting, but just never got around to to it.
The front suspension is struts, and there is aftermarket support to fit AE86 Corolla struts to the Starlet chassis for big brakes and a better aftermarket for shocks and springs. AE86 rear axle is another possible upgrade, but you need to either modify the Corolla axle housing to accept the Starlet upper links (angled inward Mustang or first-gen-RX-7 style) or modify the Starlet floorpan to accept the Corolla upper links and panhard. The stock Starlet 4-link seems to work just fine with skinny tires and/or loose surfaces. Once you put grippy wider rubber on it, it can bind and things can get interesting when you push the car hard on grippy asphalt. For that reason, I was going to make the Corolla axle and suspension fit the Starlet, but once again, never got around to it.