Lol its all very well 4WD, RWD, non-vag engines, but its not easy and its expensive!
V8 in a Mk3 would be a difficult task!! Not to mention the engine price (would need to be a S4 or even an RS4 V8 to be worth while, lets be honest).
A 1.8t to do yourself is £2.5k, if not more. That's not a difficult conversion really, as there isn't much custom stuff at all (nothing difficult anyway) plus there is lots of help and advice out there. If you got the skills to cut the car up and get a 4WD setup in working correctly and money to buy the setup along with a engine, then go for it. If your good with wiring, etc, then maybe a TSFI engine would be cool.
Non-vag is stupid in a vag car and ftmfl

A budget would be nice. Less than 5k? 10k? 20k?