The reaction is:
\[
Fe_2O_3 + 2Al \rightarrow Al_2O_3 + 2Fe
\]
Now calculate the heat evolved:
\[
\Delta H = (\Delta H_f^{\circ} (Al_2O_3)) - (\Delta H_f^{\circ} (Fe_2O_3))
\]
Substitute the given values:
\[
\Delta H = (-1700) - (-840) = -860 \, \text{KJ/mol}
\]
Moles of \(Fe_2O_3\) and Al are in the ratio 1 : 2. So, 1 mole of \(Fe_2O_3\) weighs \(112 \, \text{g}\), and 2 moles of Al weigh \(54 \, \text{g}\).
Total mass of the mixture is:
\[
160 + 54 = 214 \, \text{g}
\]
Now, the heat evolved per gram of the mixture is:
\[
\frac{-860 \, \text{KJ}}{214} \approx -4.01 \, \text{KJ/g}
\]
Thus, the heat evolved per gram is approximately 4 KJ. Hence, the correct answer is (4).