I'm not at all convinced that the Polo puts out a lot of power compared to other makes! Maybe american cars

But not really other european or pseudobritish makes (Vauxhall, "local" Fords).
As GT or G40 variants, yes... but the more recent models seem to have rather large blocks for their output, and the older, far more common CL's (single-barrel carb / Spi) are kinda lazy too. The torque output's damn fine, but the power is lacking when you rev harder.
Example: Fiat got 45hp out of first a 998, then 903cc, and finally 899cc engine in the Panda, Uno and Cinquecento (compared to the 1043 Polo...) and that came in at 5900 rpm for the 903, hardly thrashing it for such a small motor. (Mk3 - 5200rpm, mk2 - 5600rpm, or more!)
(plus their 1109cc Sportings have 55hp - similar to a 1272cc CL, or a more modern "1.2", however big THAT is... and the Seicento's 899cc may only stick out 39hp, but that's STILL even-stevens per cc with the Polo). I don't actually know of any over-1000cc engines since the 70s that have developed less than 40 horsepower, except for "early" Polo 1098cc ones...
And even if you DID drive a GT - that's 75hp from 1272cc, at around 5900rpm. Or in other words - what you used to get from a 1275cc Punto at only 100 revs less. And the new shape Fiats have 5hp extra compared to that from the same or less capacity!
However, except for the better built of the FIRE variants, I'd expect the Fiat engine to fall to pieces loooooong before the dub's!
(Hmm... the old Fiat 500... now that might be a viable contender for having less hp per litre... but it's not exactly a contemporary stablemate)
Space-wise... Dude! Keep the Polo! There ain't anything comparable that you can fit more stuff into (and onto!) than a Mk2/Mk3 hatch. Well... maybe a Uno. But would you want to drive one of those?
It's basically a large brick-shaped box with an engine bay welded to the front after all

Whereas you can see the 106 is far more slopey at the back - maybe not as much as a Coupe, but bad enough - not to mention being shorter overall.
(I can't say much on the interior room of the Polo... this example should suffice though. I've had four big-ish guys (three plus me) in it and completed a comfortable-enough 300 mile round trip, but I wouldn't say there was
surplus legroom. At least one of them was limbs akimbo for much of the ride, and I felt knees in my back a couple times! Not cramped, in that you're pushing the main body of the front seats, but leg will touch leatherette for certain)