figure $400 gone for the engine and clutch. there's another $45 for a header and you should do a filter/adapter which is another $50 and jet the carb (if yo do exhaust it's best to also free up the intake). if you want to remove the governor you'll need to get a billet rod for $150 (unless you want to take a chance destroying your $300 engine) and possibly valve springs for another $20.
that puts you right at your $700 limit with shipping providing you can do all the work yourself.
you'll have a kart that gets up and goes at that point, but i still think the money would be better spent on the 6.5. $700 in mods for one of those and you'll have a screamer that's putting out well over 11hp (maybe 12ish with exhaust and a filter).
if you plan on leaving the 11hp bone stock, then go for it.
i just really feel like you're jumping into this with a limited budget.