been a loooong time since I posted here, but came back because I just bought an '03 Allroad with the 2.5 v6 TDI and wanted to see if there were any projects going on here :-)
I don;t think theres any real substance to the 'soft cams' myth. My car has 220,000km on it and it runs very sweetly and has heaps of power - but it also has a perfect service history since new, serviced every 15,000km or less at the audi dealer.
From what I've read, the real problems arose with these engines when on the 'variable service interval' regime, when you could go up to 30,000km. But, if anyones read the owners manual, you must use the correct oil if on this service interval (505.01 - NOT just 505) which most mechanics would take no notice of.... infact IME theres also about a 30% price premium for the 505.01 oil over one that complies just with 505.
Anyhoo, the V5 TDI is a beauty, smooth as silk and considering the Allroad is 1800kg without passengers and with quattro, 7.5l/100km that I got off the first tank I'd say its a really good engine!