I have to say that a rotary is the best way to go. Check out
www.nopistons.com (I post on there too) Everyone there is very knowledgable. You can also go with carbs or EFI. My bro has a 1975 Mazda Repu (Rotary Engine Pick-Up) with about 250hp and it is a perfect daily driver. You can make as much power as you would ever want in a VW and the engines last forever as long as they have oil and gas. However if you dont change your oil, you loose an engine. Or if you run out of gas (or get fuel slosh) you loose an engine. They are fixable but you usually need a new houseing