Looks like a very viable project, Tiger. Thanks for sharing it here.
The exhaust on that looks like an A-1 Sidewinder; these are excellent for making power with a big, high-cammed engine. Do you know the specs of yours?
You might be able to quiet it some, without losing the benefits of those equal(ish)-length tubes, by replacing the muffler. Others who know much more than I will chime in.
As you may recall from your youth, VW Bug engines like to leak oil. After you get your oil cooler lines properly re-routed and squared away, you will find that the leaky bits on this engine are pretty much the same as on that 1200 you learned to drive in. Fixes are the same as ever: good gaskets, good hardware, careful assembly, and don't overtighten.
Your stock transaxle ratios can be changed, and depending on how much power your engine has, and how strongly rebuilt the box was last time, you may want to consider opening it up to do so—or springing for a new/refurbed unit.
There are lots of gear ratio choices available and you can spend pretty much as much money as you have, and then some. If you've got some horsepower—and your engine looks like it should have plenty, once sorted—by far the best bang for the buck is to get a new Erco ring and pinion set at 3.44-to-1. That's a taller gear than VW ever put in there, and stronger. It will raise all your ratios, turning 1st into something more than a stump-puller, and leaving you with a 4th gear that (depending) runs 70 mph or so at 3000 rpm—all at the expense of off-the-line acceleration.
I have two cars with this gearbox: a Subaru-powered (135hp) MGTD replica, and a Type 1 (120hp) 550 Spyder. In both applications it works brilliantly.
If you don't have a VW gearbox guy in your rolodex then maybe call these guys. Seldom here complaints about their work.