I doubt it would be so "easily"...620hp to 1000hp is a BIG difference, and as you said it yourself, "it would be almost impossible to drive on the street like that and get .5 mpg".
Also, (and don't think I am bashing the ZR1 or anything) why didn't they modified the cams , exhaust, etc, on the LS7 instead of supercharging? Judging by what people said in other threads, +600hp is easily achieved in the Z06 with those mods.
Why not cam the LS7? Because it would ruin drivability and practicality of the car. Have you ever rode around in a street/strip car or a purpose-built track car with a big cam in it? They dont make any torque below 3,000 RPM (depends on the cam, you can get cams in every size and shape you want which would affect the torque curve through an entire range), are on the virge of stalling with stock torque converters, and you have to wind them out to 5,000 RPM just to get going from a complete stop at an intersection, and it ruins fuel economy. Not to mention exhausts quiet enough for the street are always restrictive.
There are things that people like you or I or anyone else can and will do to their cars aftermarkiet to make them faster that would just not be acceptable to the vast majority of people that buy these cars from the factory. They have to put conservative, streetable engines in these cars because that's what people expect. For the vast majority of people driving a car with a big cam is a huge hassle and not much fun due to the sacrifices you have to make to do it.
Superchargers and forced induction in general are great ways to make more power out of less cubic inches. This means that at low boost you have the fuel economy advantages of the smaller motor, the weight advantage (if applicable) of the smaller motor, and the size (physical) advantage of the smaller motor. And at high boost you get some of the advantages of a cammed bigger displacement motor (higher peak hp).
And this hp/liter stuff is just engineering masturbation. No one cares how many liters a motor is, they only care how heavy it is and how powerful it is. There are definite situations where a physically larger motor will not fit into a given car, where you'd want to get more hp/liter and more hp/pound and the decreased fuel mileage of having the motor turn 4 cams isn't a big deal. And there are cases where you dont have to worry about space limitations in some ways. Remember, a Ford DOHC V8 is too tall to fit into a Corvette. The pushrod setup actually makes for a more compact motor that is lighter with a lower center of gravity. I emphasize pushrod motor, because pushrod motors have a hard time making 100 hp/liter. The thing about pushrod motors is that they have a better
BSFC than OHC motors. They get more gas mileage per horsepower since there's not as much parasitic drag on the motor. They are also lighter, and they are shorter which makes for a lower CoG.
Pushrod motors have major limitations, but they have advantages also. It just depends on the application.
Consider that the Ferrari V12 used in the F50 weighed 437 lbs and made 513hp. The LS7 weighs 458 lbs and makes 505 hp. Now keep in mind how much cheaper the LS7/Z06 was compared to the F50 which is truly a supercar when you comapre them. They have roughly similar numbers, the difference is that the Ferrari was 4.7 liters and the LS7 is 7.0 liters. But since they weigh almost the same and the power output is almost the same... does it really matter what the displacement is? If you can get 2 more liters out of an engine and make up for the weight and power disadvantage of a DOHC motor... why not? It's just a different way of accomplishing the same thing.
You dont win a race and then get points off because your cylinder bores were bigger, it doesnt matter. Period.
The only times it matters is when you ahve a class restricted by displacement by the rules, then teh tricks to get more hp/liter come out. But for anyone on the street it doesnt matter.
And here is a 1000 hp supercharged LS1 Camaro:
http://youtube.com/watch?v=rZUopkACR0o
If you can get 1000 hp out of an old LS1, you can easily get it out of this ZR1 motor. The problem is that there are sacrifices involved to do it.