@IndianBob- As both Jim and Bill have mentioned, whether VW or 356/912, your engine will run happier being fed ambient temp air instead of the preheated air it ingests now. Also, filter changes must be messy- on my first performance VW engine I did the oil filter on the shroud like that and it took quite the pile of rags to keep the engine from getting covered at oil change time. Is the original cooler still in the shroud, or is there a block off plate and that's where the oil for the external cooler and filter is coming from? If this is the case, know you're only filtering some of the oil some of the time. A true full flow system takes oil straight from the pump or oil galley after the pump, so the engine is fed clean oil 100% of the time...
A good winter project- re-plumb so the filter and cooler are in the left rear fenderwell; the engine will thank you for it!
So- anything done to the engine? How is it for power? Al