Edit:
Dont even THINK of fitting another engine without declaring it! I hope that isn't what you meant?!Most insurance companies will base the quote off the engine the car came from, the MK3 GTI is in the same bracket as the MK2, so it wont even cost any more! If you get one from a lower bracket, it'll be cheaper i.e. SEAT, Vento or Passat.
If your insurance company wont let you change the engine, then DON'T, wait till you can. I'd suggest HIC and a good insurance company
1. VW 2e/ADY(?) yes, audi 3a no. Not enough to give you any issues though.
2. Yes
3. Yes thats the best way, everything plugs in
4. Not alot, unbolt everything, pull old engine, fit head to 2.0 lump, put it back together! Try to keep all the MK3 anxileries if you can, the belt setup is much better. You'll need:
MK3 metal coolant pipe
MK3 plastic flange on head
Block old header tank feed pipe from rad, use a bolt in a short length of hose and jubilee it
Breathers need some work, but after a bit o head scratching you'll get it working
5. About 120BHP if you dont do any mods
6. Passats and MK3s/Ventos, SEATs etc. Try to get the earlier 2e engine if possible as it's a direct swap. If you get a later one (ADY?) the dizzy wont work and you'll have to fit one from a 2e.
This is what I ended up with:
