Oh man, if they could repop the Chevette kit, that would be amazing! I would, most likely, hyperventilate if I saw that coming.
I've read in a few spots that the "formal" grille on the '78+ Pacers had nothing to do with the engine, radiator or any other mechanical fit issue.
As far as I can tell, it was purely an aesthetic update. There are a few components to this: 1.) The Pacer needed a facelift; three years of the same fishbowl is a lot. If you want customers to keep buying a weird car, you better refresh it a bit. 2.) "Personal Luxury" cars were becoming increasingly formal, in fact, obnoxiously so. Check out the silliness of things like the Mustang II Ghia and Monza Town Coupe for details. Thus, it only made sense to make the Pacer follow this trend. 3.) As a proof of #2, the Pacer was constantly being pushed upmarket at AMC. The deletion of the "X" and the improvement in equipment of the D/L (later DL) model, and the introduction of the "Limited" a bit later showed that Pacer was being marketed to those who wanted comfort. The Limited, at the end of Pacer's life, was, in fact, the most luxurious model in AMC's lineup!
So, I think it was just AMC going with the trends, and trying to make the Pacer more relevant to people who were looking for a "formal"-type personal luxury car, but wanting to downsize to save money on gas and save some room in the garage.
Given the sales and how they petered off, I guess it wasn't very successful!