The police were just "speculating" since they couldn't catch him. That's where the line "we believe it to be supercharged" comes from... There is also a police POV shot of the Challenger just pulling away from them without much effort that hammers this home...
Now, the line "hopped up to over 160" simply means 160-MPH, which was EXTREMELY fast for 1971, especially from a car with only a 4 speed transmission. I owned a 1970 Challenger R/T, they came with a 150mph speedo, but with 3 & 4 speed transmissions could NEVER sniff that kind of top speed in stock form.
Using 1971 roads (not major, modern interstates), going from Denver to San Francisco in 15 hours (like the film suggests) Kowalski would have to average well over 90mph. That's AVERAGE, which takes in account stopping for ANYTHING. (which means you have to drive much faster than 90, like well over 100.) Virtually impossible unless your car is "hopped up".
"I don't want your watch, man. I want your friendship!" - Lightfoot
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