So the progress I've made. I'm stripping the interior and throwing what I can on eBay, build money. I had bought a Passat that had a broke a coolant flange and destroyed the pistons for $300 and it went back on the road and Craigslist this weekend.
I still think I have more to remove off the dash. The rusty bar can go. A lot of the wiring is going to go. Also I've sourced a 2.8 Passat transmission for $150 bringing build total to 4$55 I believe. The Passat rubs the same longitudinal engine the A4 runs but is dedicated FWD and saves at least 25 pounds in weight and accomadates a mid rear set up. Once everything of value is stripped the rear floor gets cut out. The biggest challenges right now are finding a good clutch and flywheel and I'm really hoping to find a cheap way to go limited slip differential. I've seen that the torsen diff in a 89-91 A8 is a close match but requires a good bit of machining.