I have an 88 st165 and the trans seems to be in good working order. It's had good synthetic gear oil in it for a long time. There is no grinding and shifts perfectly fine.
I want to swap the engine to a 3rd or 4th gen soon. I see a lot of 205 engines being sold with the trans. But it would save me quite a bit of cash to just put in the engine. I don't plan on going nuts with power, maybe 350-400 to hang with the modded Evo's/STi's in town.
It looks like the final drive ratio is the same between the 165 and the 205 but the ratios are a bit closer in the 205. It seems to me, that keeping the stock trans is a better way to go for me. I have to think about shipping costs being that I live in Anchorage Alaska.
Are there any other reasons that a 205 trans would be better?