We have a 1.6Tdi Loaner this week and it's a cracking little engine, far better than the 1.9Tdi of which we have experience with Mk 5 Golfs. The 1.9Tdi is a good relaible solid lump and some go on for way over 200,000 miles with little problem BUT they are a bit noisy in town! The 1.6Tdi is really quite and hardly appears to be using any fuel!!
Re the S3 Oval exhausts, I think the picks are mock ups, the real life one I saw in showroom had round pipes!!
the 1.6 isn't a bad engine. it was relatively torquey and economical. still much better than some of the rubbish other cars have as their entry level. only thing was it's emissions were a bit on the high side. if they sorted that i reckon they could have kept the engine around until the next gen. it just so happens they'd developed a 1.2T for the A1 and decided they might as well drop the 1.6