Think of it this way: you can't (easily) put a Ford engine in a Chevy car, or a Honda transmission in a VW. They're simply not compatible. Now, you could (possibly) put a Ford V8 in a Ford truck that came with a Ford V6.
You can upgrade your Core 2 Duo with another Core 2 Duo of the same generation. You are stuck with DDR2 667MHz RAM. If I were you, here's what I'd do:
1) MAX the RAM. It'll take 4GB and show 4GB, but ~3.3GB is all you can actually use. Upgrade it to either 3 or 4GB of name brand DDR2 RAM.
2) Install an SSD. I wouldn't waste a ton on a super-speedy SSD; you're heavily limited by your mini's SATA I speed. Still worth it, though - I just priced a 240GB SSD for $90 for an upgrade project at church.
3) Leave the CPU alone. The upgrades are costly, complicated, and simply not worth the trouble - believe me, I've done it before (though that was an early Core Solo mini to a Core Duo - that WAS worth it, as it was faster AND added a CPU core. You can't make that big of an upgrade as you're already dual core and that's the most you can get, plus the highest speed available to you is ~2.2GHz and you're already at 1.8. Just not worth the trouble).
If you do these things, this mini will be a respectable performer. And IDK what OS you're running, but I'd probably stick with Snow Leopard for that machine. Personally, I have a 2009 mini and it's not much higher specced than yours - I have a 2.53GHz Core 2 Duo, 8GB of RAM, and a 120GB SSD. Very respectable machine with those upgrades.
You can upgrade the CPU to the same vintage/generation and upgrade the ram to PC6400 800mhz from the pc5300 667 mhz.
Can you? I didn't think the '08 supported 800MHz... but I could be wrong.
It's not mentioned on everymac.com, either.