i read through the specs on that VW swap. For what it costs, i dont think you are getting much in the way of power gain. 165hp, 280 torque is not all that much power when you could drop a v8 for cheaper. There is the added mpg as an advantage of going with the diesel, however...but the cost is so much, you may as well still go with a v8 swap. The 1.9 is quite light (lighter than the 2.5l) so that too would be an advantage, but i still think a 2.8l swap or a 4bt would be the best deal. the 4bt can produce far more power than the numbers the VW engine is putting down. The 2.8l would also produce some good power for a wrangler, but the swap is pretty pricey and requires that all the sensors (tire pressure, etc) get transplanted with it. I think all that wiring would get pretty complicated for someone looking to do this themselves.
Then again, if they could somehow pull more power out of that VW..somewhere in the neighborhood of 200+hp and 300+ torque while still returning 25+mpgs, THEN i would prob be more interested in going with that.