Law states in nsw anyway, that you cant have a pod filter open in the engine bay ie not in a box...but most of the cai have the pod filter above the fog light which is technically the bumper not the engine bay, so theoretically no not illegal :)
The 'curvy' one you are seeing is not for the corolla as the zze has a torsion beam rear hence the straight bar I like 1rocky have the trd sway and is a very good part
2.25" from catback is the way to go for the 1zz but if u dont want to upgrade the whole system, sportivo muffler does a treat or just get the sportivo exhaust from the catback from a wreckers and have it installed on your car.