Is this possible?? I know all of the electronics would have to be replaced, but how hard would it be just to rip them all out and replace with units from the new engine?? Would there be any hood clearance problems (I expect so)?? About how much would it cost??

You can put a VR6 in any VW, even a rabbit. You didn't specify which gen 16v, so I'm assuming A2. A2 VR6 conversions are pretty easy.

check out forums.vwvortex.com for more information about that.