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Re-consider, Brad. Re-consider! Have another look at that '98 A4 1.8T!
EDIT: just saw your W8 4Motion mention - man - is that really what those are going for, or is that just a great deal?
...I may go out there tomorrow (or is it today?) afternoon and take a look at her. Tim and I are pretty decent friends, so I'm sure he would hand me the keys if I asked nicely. Otherwise, I know that if I asked he would do his best to find me what I want, or get me something as similar as possible. He deals strictly with VW/Audi products (for the most part... There may be a BMW or a Volvo lingering from time-to-time), and he is pretty good at finding great cars.
I did see that he had a '99 Jetta GLX VR6, which would be awesome... But for the money (if I recall, it was $7500... it did have low miles though), its a no-go.
On the W8: It largely depends on what you find, what condition its in, and more importantly what transmission it has. The W8 with the 6-speed is exceptionally hard to find, and they usually hold their value rather well... The same can be said for the rarely-seen W8 Wagons too. Still, it isn't a horrible price, but its more than double what I'd want to pay right now...
As it stands, $6-7K (assuming I can get $2500 out of my car) is about all I can do at the moment. Beyond that, God only knows what insurance would be like on the newer and decidedly "higher class" car.