You are thinking about the L-head 206 aren't you? I have a ZTU with 206B in it, but the conversion was done before I got the tractor. It still runs the Kerosene head.
If you are thinking about the overhead valve 206 you may or may not have to come up with another flywheel. Another issue is the water pump inlet is on the other side from the regular ZT radiator outlet. That engine is a bit taller too. You may have to cut a hole in the hood for the oil fill/crankcase breather cap.
Between the L-head RE and 206 engines, HP depends on heads. The flywheels are different between the RE engine and the L-head 206. The RE flywheel is splined to the crankshaft and the 206 is held on with 4 bolts, So you have to use the 206 power unit flywheel. I think everything else will work, but may require a combination of the 206 and RE clutch parts. That should be obvious if both are sitting there apart. The ZT starter should work too.