If the latest 2.0 140 TDI unit is good enough for the latest A6 (which weighs pretty much the same as the A8 of that generation) then a 1.2 making 144 would be good enough too but maybe with far better MPG.
This is more or less what VAG is planning but maybe 5-10 years ahead IMHO. I can see a 3cyl 1.0 TDI being the norm and a 4 cyl 1.6 TDI being for premium models circa 2020.
And I just bought a 2.7 V6 TDI...