i agree, my audi dealer is also shit, i would never buy one unless i could do most of the work myself or had a reputable/reasonable german auto tech nearby
this could easily happen with any manufacturer not just audi... if my samsung lcd died a week after my warrranty im sure they wouldnt cover it (although i would be pretty pissed as im sure you are)
you could also look at it in the sense that no other car has the 50k warranty

they are all 36k
did u post on audizine about finding an engine? i wouldnt have the dealer do it, you might can ask around in the regional forums and find a good local german shop