A few people have put 1UZ's into MA70 Supra's, which have an almost identical chassis to the MZ21, so it's definitely possible. There were two such beasts at the Toyota Nationals last year.
Don't expect it to be as quick as a mildly tweaked 7M-GTE, but it makes for a nice cruiser and sounds the biz with a good exhaust.
I have spent many days thinking about doing this conversion to my own soarer, but saw the 1JZ as a cheaper option for the power I wanted (plus nearly a direct bolt in ) However I still want to do this convo to a Z20 Soarer in the next couple of years so id say definitely go for it as it will sound awesome and be the ultimate cruiser with some power to boot