The problem for VW I don't think lies so much in engineering as in marketing. An R with RS3 power? Or even S4 power? And you have to add in that one of the selling points of the R is a very high level of equipment and fit/finish/quality for its price point, and you have a real dilemma. Either it costs so much it ends up in Audi land, or it cannibalizes Audi sales (unless they crap up the interior and de-option it to make it a "track rat" special, which doesn't seem likely). Where do you put a significantly more powerful (that today) Golf in their lineup?