>>>>I've heard they can be punched out to as much as 3.0L.  *However*, I've
also heard that the engine is right on the edge as far as cooling is
concerned in its stock form, so expect to have to put a lot of effort
into improving cooling if you increase the displacement by any
significant amount.<<<<

Yea, your right about cooling problem, there is not much room from
improvement, but, the main problem of the AC is "under power", that is one
good reason they overheat (weight vs power vs wind).

When i talk about "where is the major heat problem" on a AC engine, I don't
agree with most AC engine owner (Vanagon or Bus). I think the oil/engine
core heat is not the main problem (many are running over 240F-oil), with a
clean (i said clean! inside and outside) engine case (and tranny at the same
time), i think you can easily maintain a low oil/ core temp, bellow 220F.
Just by cleaning and polishing my fan cassing, fan, engine case (stop all
oil leak), all clean and painted tins, i went down from 15F. The head temp
was down by 20-30F also.

Work on the head will include external polishing, grinding, and some
drilling. Wait and see.

This discussion is way too serious and thechnical, hey, it's Holidays time.
This is way more interesting:
http://www.thesamba.com/vw/classifieds/pix/242011.jpg
No need for 4 wheel drive....

Ben