Here is my take:
Don't try and make this bike into something it is not. Why waste your time and money trying to make this POS into a performance motorcycle when you can buy so many other bikes that will perform much better for much less money????
If you want to hang an oil cooler on it because you think it's cool, then do it. I totally get that and I'm 1000% on board with that. I get it that is fun. But if you need to ask, then you are missing the point of doing cool things because you want to. Do it because you think it would be cool to do. Don't do it because you have some fantasy that this POS bike (said with affection) is anything more than it is. Sure you can add a few HP to it and get to...35 hp?? You aren't chasing 35 hp. You are chasing the process of getting to 35 hp.
I'm pretty sure DragBikeMike does what he does because it's fun for him and not because this bike has some sort of "holy grail" potential.
I think the LS650 is a stunning motor to look at and I enjoy riding it. I think it's as cool as anything, but...it's a turd. It's a fun motor to fart around on. If you give me 40 hp, it will still be just a fun motor to fart around on and that's OK.
I never thought about hanging an oil cooler on it, but I think it would LOOK really cool.
Just do it!
Full disclosure: I had a 71 Triumph TR6. It was a rescued, basket case, flat tracker that someone put together and made (close to) street legal. It had a cheap chrome oil cooler hanging under the seat where the side covers and airbox would have been (oil in the frame on the 71 and newer trumpets). The oil cooler would have done nothing over the course of a local flat track race, especially hanging under the seat directly behind the air-cooled motor. But you know what...that was hands down the coolest bike I ever owned.