The right buyer may be willing to pay a bit more for that hp (though you didn't say how much hp), but I wouldn't expect to even see 20% of the modification expenses at resale. Maybe well less on a 8 year old car with 60k. I would not execpt to find a buyer on demand unless the price is very low.
I'd like to see what he has done for $85,000! I have done more than what you list to my 99 vette for far less than that. I have no illusion though about ever getting anywhere near out of it as to what I put into it. That's not why I did it, certainly not as an investment.
From personal experience, I also have a nice 98 WS6 w 80k mi with over 650 hp, tons of mods (maybe $30,000 with 383/supercharger/etc/etc), and when I looked at a new GTO as a possible new daily driver, dealer offered me zero/nothing/nada for the mods and offered only NADA/Kelly Blue Book Trade In value, said it would be to hard to sell. Preferred I take off/out what I wanted and he would still offer me the same. I think most dealers prefer stock vehicles and do not like modded cars and find them hard to sell.
Finding a buyer willing to buy a 98 for anywhere near the price of a new ZO6 I would think not an easy to find or big market (I know I wouldn't, and I'm a hp nut). KBB on a 98 convertible, loaded in excellent condition, private seller is ~$21,500; I doubt I'd pay over $30,000. (Sorry if that offends anyone, but I have a car similar to what is described, and while to me personally it is worth way more than that, the reality is that to most anyone else it is not).
This is just my free $0.02, and sometimes get what you pay for.
ZZ