celica st165 = 1st gen
celica st185 = 2nd gen
celica st205 = 3rd gen
caldina st215 = 4th gen
caldina st246 = 5th gen
IMO, the Gen 3 is better than a Gen 2 due to better oil reticulation, larger injectors, more efficient turbo, water to air intercooler, MAP, and most importantly - the oil filter is under the car on the sump pan, not between the alternator and the exhaust manifold (could be worse though, gen 2 3sge has oil filter under the exahuast manifold).
Gen 4 has coil on pack, side feed manifold, but has exhaust manifold that can warp unless after 1999 and the manifold/turbo as one cast unit.
Depending on what you want to do and where you are located, the gen 3 is a better place to start with modifications rather than the gen 2 because improvements were made so if you are starting from a baseline, better to start at something that is better from the start (and the oil filter under the car.. that in itself is worth the upgrade).
Parts availability is an issue. i notice you are in minnesota.. that means that getting things for the st205 will not be as easy as markets where the st205 was sold (being in New Zealand, I can just call up the local toyota parts dist. and they have most common parts available off the shelf).
There is a small but available market for gen2 3sgte's espec. with MR2s getting modded over in the states a lot.
Of the cases of block cracking, there have been a handful of cases of this issue and IMO is blown out of proportion. I've heard of more evo and subbie engines blow up than I have 3sgte's. There will inevitably be failures in any form of manufactured goods and in various cases there is never a clear presentation of what the root cause is. Just my feelings on this issue.
If you are going to build it up, go with the Gen 2 as the aftermarket is there for you to buy from and the market supports this.
If you wanted something diff, don't mind waiting for "overnight parts from juh-pan", and aren't looking at huge upgrade and want the oil filter on the bottom of the car, then go gen 3. if you want coil on pack with a side feed manifold, go gen 4 - just change the manifold and turbo to gen 3 or aftermarket.
Oh - and that old 3sgte power primer is a good start but hasn't been updated in a long time. It needs a big update espec with numerous people doing a lot bigger numbers on the 3sgte now.