I don't think it is something you can ignore.  The problem is that the
ATF gets into the differential, diluting the oil and dropping its
lubrication qualities.  I am aware of people scrubbing out their
differentials by ignoring it.

It actually isn't all that much work to get the auto transmission out
and replace the things that need doing.  Probably $20 of parts plus
new ATF.  There are two paper gaskets, an o-ring and two oil seals
involved. In my van, I can do it without disconnecting anything at the
engine end and without undoing CV joints.  It is a little awkward
getting the transmission up again on your own when on your back on the
floor, but a mechanic should have no trouble.  In Australia (where I
am) a good VW person should be able to do it at a lesser cost that you
quote.  I'd be surprised if it took a competent mechanic more than 4
hours max.

I'd suggest getting another quote from a VW savvy mechanic, but I'm
not criticising your regular guy.
FWIW

Dave
downunder

2008/8/27 Troy <colorworks@gci.net>
>
> Just got word from my mechanic that the seal between the transmission and the differential is leaking. I'm told this is a $600 job, as the transmission needs to be pulled. Does this sound like a reasonable and customary charge for such a service? It's beyond my capabilities, so I'm at the mercy of this mechanic. The leak seems to be small, so I'm halfway tempted to leave it for awhile, perhaps just topping off the differential fluid as needed. I'm driving less than 4000 miles per year, and this is an expensive little repair that was unexpected to say the least. Vehicle is an 89, auto westy.
>
> Thanks,
>
> Troy