Sure enough the car is cheap, but i would be concerned about 1 thing and 1 thing only...
Although the car may look like a GTI when its finished (based on your plans, i'm sure you'll do a good job), are you not concerned that it wont go like a GTI?
What happens when you're on a B-road late at night and fancy giving it some beans? No Turbo whistle? Nowhere near as much power? No sculpted steering wheel to get a good grip of? Or different dials to look at? (Unless of course you're planning to change these too)
Personally, the idea of a car which looks like a 1.4 S but has GTI running gear is far more interesting. 
+1
I have a mate who bought a BMW M5 and put a 520d badge on the back - Much better way to do it, especially when theres a screaming V10 upfront!