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I doubt if you could get 85hp for $1000 but you could go through the engine and upgrade it some.
I would take it all apart and clean everything, check the crank replace with stock if necessary, resize the rods/new small end bushings, have the case and heads bored for larger cylinders(90.5mm or shoot the works and go to 94mm, your call), pick an aftermarket cam (not too wild, maybe an Engle 110, especially if you keep it single carb), clean up the intake and exhaust ports slightly and a fresh valve job, find a good 1.5" merged exhaust and have some fun.
ken
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