Regarding starting an engine sitting on the driveway, do you do it without coolant? How long can you run it w/o damage? 5 sec? 30 sec? 60 sec?
At the very least, I'd check compression.WOw - so you transported the engine and other bits in the Rabbit?You've got what it takes to swap the engine I'd say GO for it.
Here's some good reading for you;http://www.vwdiesel.net/forum/index.php?topic=20551.0Have fun, take lots of pictures... we live for this kind of stuff!