We talked to a couple of VW shops in the Seattle area and also considered converting to a different engine altogether, Subaru, Ford Zetec, VW diesel.
In the end, we decided to stick with VW, and picked a shop first. We chose Specialty Motors in north Seattle (www.specmotors.com) and the folks there are very knowledgable and also very nice. Dean Auve, the owner, Pete, the tech who did much of the engine work, and Dustin, the guy behind the counter (who does much more than just schedule appointments and order parts) are all top-notch professionals.
When I first called, I was very impressed that they would NOT give me even a ballpark estimate over the phone for an engine/tranny rebuild/replacement. Why? They wanted to see the vehicle first! I left it for a day and I'm not sure how long they actually looked at it but they described how the incorrect spark plugs were in it and also came back with a list of things that needed to be done. Because I suspected or already knew about most of the things (e.g., it needed a new radiator and some coolant hose work), I knew they did a thorough job.
Then Dustin had to put up with me during my next phase, talking to other folks that had had major work done at Specialty Motors. He was very nice about finding some, calling them to see if they would mind me asking them questions, then getting their numbers to me, etc.
I was impressed when current customers described Specialty Motors as a business that goes the extra mile to make things right.
So they got the job.