The 3 cylinder TDI can't run mechanically it is a Pump Deus Engine or PD for short. Due to the small size of the engine it would fit very easily in the Rabbit however not without some fab work. The CTN transmission has the lowest differential of any VW transmission at 3.16. You can also swap in a taller 5th gear on these transmissions for an easy 100mpg Freeway beating ride.
There has been plenty of people who have swapped in 4 cylinder TDI engines into these. A few have put the 3 cylinder engines into the pickups with great success. However nobody has put one into a rabbit that I know of here in North America.
What you have planned would be much simpler and get you up and going much faster. I would probably just stick with that at this point. Besides I want to be the first to do the 3 cylinder swap LOL
