The reason for "de-tunning" the 2zz in the Corolla XRS was to broaden out the torque curve for better low and mid range response thus making it a better daily driver for the average consumer, i.e. they don't have to rev it up as high we do to make it go.
Me personally I'd rather have my high reving, high strung Celica any day of the week over a Corolla, but I guess de-badged it would make a good sleeper for it's class.http://www.tuningnews.net/news/040427/toyota-corolla-xrs.php
"produces 170 horsepower at 7,600 RPM and 127 lbs./ft. of torque at 4,400 RPM and delivers broader and stronger mid-range torque than the previous versions of the 2ZZ engine."