I am running the same engine in a CAP 262. At least I think that it is a 262 as it has been so many years since I built it, I don't remember.
But getting back to your OS 1.60 and as you stated it is a good running engine with plenty of power. Personally, I would look at the Great Planes line of planes and you may very well be able to team that OS up with a great plane.
Personally again, I would not hesitate to put the engine in a 1.20 size model as I have always thought that you can never have enough power. You can always throttle back, but it is real difficult to throttle up, when you are already at peak power.