Junk is subjective. Lots of people think Traxxas is junk. Best to just realize the vehicle for what it is, and you pegged it 'it is good if you are not sure you are going to like the hobby'. However, the experience of owning a a buggy like that is usually filled with frustration, so as long as you know it is not indicative of other 'hobby grade' nitro rc's then use it for what it's worth.
The thing you want to realize is there is much better out there as to not get discouraged...fixing it, breaking it. Fixing it, breaking it. It's one thing to break nose-diving off a 15ft jump, another to break going off the curb (speaking from experience here). ;-)
knd88...may I ask what the existing engine--which you say has no issues--is lacking for you?
Assume you just want to go faster, but how do you drive it? on-road, off-road, both? You will not want to hear this, but I'd advise against getting another engine for that buggy. Especially if the engine is working fine.
I doubt the buggy can sustain enough additional power that would be noticeable. Thus you would be buying an engine that won't do you much good. That is the one real downside with this level of vehicle....you can only upgrade it so much (unless you are ready to spend a fortune--meaning you would build a new buggy).
Parts are cheap, so I would suggest just investing enough to keep it running. They (manufacturers) will try to promote 'hop-ups' that are not needed, unless you are interested in looks, which is fine, because you'll at least get what you expected).
Just something to consider: take your budget $175. Assuming your RedCat is in 'good' shape you could sell it for about $75.00. Save up an extra $50.00 and get you one of these:
http://www.ebay.com/bhp/ofna-hyper-7-rtr
I know it's 40% more than a new Shockwave, but the quality difference is 400% (that is no exaggeration). Besides you'll technically only be out $50.00 than what you originally budget. Just food for thought....;-)
Sorry for long post...I just really hate to see people throw money into something like this when chances are very good they will wish they took a different route.