Since it is not a brand new car i would start with the basics:
Fresh spark plugs (Bosch, Denso, NGK), oil,
trans lube(only on automatics), filters, etc.
How do mods affect engine?
Well, GOOD mods will increase HP by reducing some restrictions inheritent to the engine design.
For instance, better heads will increase performance by reducing intake and exhaust restriction.
Think of an engine as an air PUMP, the more efficiently air moves in and out, the more HP you get.
Other mods like differential GEARS will improve acceleration, these is not engine related. Think of adding gears as using 1st gear in a mountain bike. You will accelerate faster.
Engine mods are usually ment to increase HP output by making the engine more efficient. This means more fuel is needed to get more HP our of it. But it also means that the engine can do the same ammount of work with less effort. So, at cruise speeds mileage could be improved.
About emissions in WA, i am clueless, but dont worry about it much, just keep the stock emissions stuff and you will probably be ok. And always use mods that are STREET LEGAL ("emissions firendly").
Last, there are several mods that are well documented and will improve you cars performance. Always ask around, dont get fooled by parts that offer too much for little money: some examples are those fuel economy savers which use magnets in your fuel lines,or the "Spiral Max", etc. Those are "cheap" things that will most probably give you no gains and waste you some $.
Well documented are: Headers, Mufflers, Cat-backs, rear end gears, underdrive pulleys, heads, intakes, coils, spark plugs, plug wires, superchargers, turbos.
But always remember, the more HP you want, the more $ you need to spend. The cost of HP increases as you go up.
Going from 200hp to 300 can cost around $3000, but going from 300 to 400 can cost more than that.
Read our TECH ARTICLES section, theres tons of info around for novices.