I have a 2366 engine with an overly-conservative cam (long story) and currently 1-5/8" headers.

I'd love to get a working heater and defogger without smothering the engine. Three years ago when I looked into this, Chris Foley's set up was the only attractive option I could find.
http://www.tangerineracing.com/914headers.htm

Has anything changed since then?

You can't go wrong with Chris. His stuff is top notch.
Zach

Chris' headers are top notch, but there's also MSDS.
I've never used MSDS for the /4 but I have Marty's headers on my /6, top notch workmanship.

I see from http://msdsinc.com/exhaust.html that they have a /4 system. I just phoned was advised that they don't provide a heat exchanger but suggested fashioning one from sheet metal or finding an aviation heat exchanger.

Since my main reason to change headers would be to get heat, I'm feeling more comfortable with the idea Chris's system, pricey as it is.

From what I have seen, Chris setup is the only 4-2-1 setup, is the only one with an option for some heat. and has the best build quality based on the various units I have seen. That said it is the most expensive setup and last I checked with him he is at ~4 month wait time.

There are 2 styles for 4-1 headers I have seen. I am currently running the european racing setup that has the collector on the passenger side though im not a huge fan of how well they seal but they do have stub pipes which is nice. Also is the MSDS/Kerry hunter style that crosses under the trans and has the collector on the driver side. doesn't use stub pipes, and is the most affordable.

One idea that I've had is a gas (diesel) bunky heater like this one here.

It would take some work to do it right, but we're talking serious heat.
There's two types the smaller 2K and the bigger 7K, the smaller 2K is harder to find but would be more than enough.