Rotorque

I have a 86 rx7 with auto tranny which has been turbo converted by a previous owner. This means I have very little knowledge about how thorough the job was done. How many ways are there to do this conversion?
Judging by the occasional rumours I hear from people who knew the car before I had it, my guess is that it may have suffered the old pulsation damper leak and fried the original engine leading to someone popping in a turbo engine. What makes me think this is the fact that at some stage the headlight washer switch was converted to be used as a fuel cut switch. I have to turn off the car by flicking the switch, waiting for the engine to die, then turning the key off.
Anyway, now that I have bored you with that, my real reason for this post is to get your opinions on a few mods I am considering. I have found out from searching this site that a stock TurboII runs about 5.5psi boost and that seems about right on my turbo conversion too. My mechanic mate has offered to make 3" exhaust from the turbo back (I don't know the proper terms) to replace the dodgy 'hotdogs' that are on now. My understanding is that 'hotdogs' means that I already have no cat (?) or muffler as such. Anyway, what effect will the new exhaust have on my car? Will boost go up with better flow? Or do I really need to do something to the pre-turbo part of the exhaust too? I think fuel cut occurs around 12psi boost (?) but I would be in no danger of having to worry about that would I? Please give me your invaluable opinions on this matter. I will be forever in your debt!