At 165 squares, I'd consider a hot .061. At 18 ounces, maybe the .074 but might be a handful. If you could get it down to 16 ounces, the .061 might be more manageable. Who are you racing against?
I have a mid wing own design sport with 240 squares and 20 ounces. On my .074, I get 16K on a Cox 7 X 3.5. Goes vertical from short take off run. Flat out, goes like stink even with lots of squares and thick foil. I shudder to think what an .074 will do to a Shoestring at 18 ounces, only 165 squares and a thin, elliptical wing. At that wing loading, she's going to fly fast even with the .061 just to stay in the air. Keep in mind that the heavier engine will add to the wing loading.
I'd try to use light servos, Rx and battery to get the weight down to 16 ounces or better with the .061.