yeah its because there is no heat shield there. early 8vs didnt get one as std and all the early 8v GTIs i have worked on have had some rust in this area. don't have to have an exhaust blow or leaky gasket either, though it could accellerate the problem I guess. my mates mint 120k GTI had some bubbling here and his gasket + downpipe were both fine, its just the heat bakes the paint till it starts to crack away then rust. VW fitted a shild as std here on 90spec 8vs, so they knew about the problem and fixed it. 16vs always had one even on the early cars, plus an extra one up top covering the wiring across the bulkhead.