it can be done, but there might need some fab work. the whole TDI head will be required, and should just bolt right on. TDI pistons are required, and the 1.4L TDI 3 banger pistons will work (same bore, stroke). not sure if the pins will work though, and that is where some fab work might come in.
i've never thought about running a computer in this type of setup, as it would need a special tune otherwise it would be injecting too much fuel IMO. a mech TDI pump would be the way to go. ETKA is listing the pistons for more than $100 each though, so its not very cheap. apparently Prothe bought a bunch on the cheap, but doesn't have them listed on his site (he's looking into the same conversion). worn engines will require sleeving though to bring the compression back up.
i like the idea of a 1.6L TDI, but i'm in love with the torque from my 1.9TDI. i also think the better fuel economy of the 1.9L engine is the extra displacement, and the low rpm's required. high rpm's just eat fuel.