billy1971, I wished mine was the mid tower, I'd go all the way also!
The Intel Core 2 Quad 9650 is the best in the consumer/business series of these CPU's, however there were a couple, maybe three 'enthusiast' versions that requires a lot of power. You won't have to upgrade the PSU for a Q9650, though many have to for high powered GPU's, though to be honest, there's NVIDIA branded mid range choices that's not power hungry. If it weren't for that Q9650 in mine, would take the chance of removing the dual bracket off of my MSI branded AMD Radeon 7770 OC edition, some has installed these in the Optiplex mid tower, even though they say '400W power required'. Many also installed the NVIDIA GTX 960 in low powered Alienware computers w/out troubles (around the 300W range), so am sure that you have alternatives.
Now, in regards to the heatsink/fan replacement, I'd advise to check out the specs & plugs really close, because some of those connectors are proprietary for these models, or maybe there's a chance that a good Socket 775 cooler will fit, there's many that are universal & the Optiplex mid tower is likely larger than today's of the same size class. Once all of that OEM junk is out of the way, you'll have some room to work with. I'm fairly sure that a new GPU can be installed, because those of today uses less power than models of the past (at least on the NVIDIA side). Of course, the more skilled you are, the better, and if you have friends that knows what you don't, that's good also. I'd say that if a PSU upgrade were possible, maybe even the GTX 1060 or 1070 could be installed, while performance will be limited to some degree, it won't be that bad. Be careful with brands, I've found EVGA to be the best, and they're the #1 distributor of NVIDIA GPU's, followed by MSI, also a reputable brand. Other than OEM models, cannot comment on other brands, though I highly suggest to read feedback & reviews, these are everything with unknown components.
Look at it like this, I took the stock GPU (Dell OEM AMD Radeon 7570, 1GB GDDR5) that has no 6 pin connector out of my XPS 8700, installed a low profile bracket & into the Optiplex 780 DT edition, runs great, with Windows 7 reporting a WEI of 6.9 (the same score that was produced on the XPS 8700), so the x16 slot can't be limiting too badly. The driver was initially the one for the XPS 8700, using 7zip to extract the contents, later on, installed the last driver for it on the AMD site. I have another just like it that I got for $35 on eBay for a now dead HP dc5800, so have a spare. BTW, that card also scored a 6.9 on that PC, so maybe that's it's limit, I even used MSI Afterburner to jack up both the memory & power settings, though the WEI result was the same. Pushing 900MHz on a GDDR5 card for $35 isn't bad, plus a UEFI approved card. The other number, could only be raised from 650MHz to 675MHz.
I was going to get a local wiring shop to convert the PSU into a 350-400W one, though he stated that the cost of his work wouldn't pay for itself. He suggested that I find a mid tower of the same BTX case that has a dead MB, or otherwise broken, and transplant my components into that, and order an upscale model from Dell, or if I didn't know how to do the PSU upgrade, get the one of my choice & take it to a qualified shop for replacement, where they have the necessary converters to wire things up w/out splicing & have a professional look. As well as knowing not to overload a circuit, one common mistake that first time 'homebrewers' makes is splicing (or overloading with Molex connectors) too many items on the same line. To be honest, I believe that I could do it, with some Google research & time.
Yet for now, have other projects to work on. Have over $1,000 in this PC & building another, though the CPU & RAM are coming out of the XPS 8700, the two major expenses are the MB (a ASRock Z97 Extreme6) & for now will reuse my GTX 960, will later purchase a GTX 1060 for it. Then will piece the XPS 8700 back together with RAM that I have on hand, and will find a reasonable cost i3 or i5 1150 CPU on eBay. The i7-4770 that shipped with it deserves a home where there's two 4 pin CPU power inputs to prevent freezing from being starved for power.
If you check out my sig, you'll see on the 2nd Speccy link a PC that was donated to me, has been totally rebuilt, minus the case & one HDD, an AMD build that cost me only $150 out of pocket. Initially, I wanted to replace the case, though I like it because it's from the early 2000's & very heavy duty (originally a Systemax PC). My guess is that when Dell began price wars in the early 2000's when XP was very popular, this placed many up & coming OEM's out of business.
At any rate, with dedication to your project, with relentlessly searching for answers, you'll find the info you need to reach your goals. Have been a Dell owner for the last 16 years, and have always found a way to get the most out of what I had, with what resources were available to me. On one occasion, spent too much in doing so, my mother-in-law gave me a Dimension 2400 that I maxed out, capped by the ultimate CPU replacement, an Intel (Northwood) P4 3.06GHz with H/T CPU. Had Intel placed more than 0.5MB L2 cache in the CPU, even if only 2MB, it would have been a Hall of Fame CPU. I know that they had the technology, because I have a P4 mobile CPU that's of the same era with 2MB cache. In other words, the GHz number alone means nothing w/out some memory to give it the boost needed. By the time I finished upgrading the PC, it doubled as a space heater, could drop the thermostat (had to) & close the door, even with a fan going & 20F outdoors, the PC room was toasty within an hour. Had to open the door once per hour to let some heat out.
One last thing & I'm out of here for now, though will do some researching on my own for you.
This is a very recent Topic in regards to the same PC. You may be interested in the part about the GPU slot, could save you some heartache, yet just because one person says it, that doesn't mean it's cast into stone.