Way back when I was a university student I got stuck fixing a girlfriends VW
"Bug". (I think she liked the Bug more than me but kept me around 'cause I
could fix it.) From that experience I developed a strong dislike for the
"Bug". My Volvo 544 was both more comfortable and more reliable while
providing about the same gas milage.

Once while chasing VW parts in the Volvo (Never happened the other way
'round) I struck up a conversation with a German mechanic at a VW shop.
Refering to the little flat 4, he said, "Well, it was a good idea when it
made 36HP - not so good when they increased the power. "What do you
drive?", I asked. He pointed to a brand new Caddy and gave me a slow wink.

If you want a light weight engine why not look hard at state of the art
Japanese "liter bike" engines instead of a 60 year old VW design? My
Kawasaki cranks out 108HP and is reputed to be bulletproof. Of course a
PRSU would be manditory given that the little Kawi would be turning almost
9,000 RPM.

Somebody made a 2.8 liter V8 out of a pair of Hyabusa cylinder blocks.
Making a flat 4 shouldn't be any harder.
See: http://thekneeslider.com/archives/20...usa-v8-engine/