Engine interchangeable
 

If you have a 1.8t with 20V, then you have the AWM (if I'm not mistaken). It's one of the best engines Audi made for the B5 (if not the best). You can get great gas mileage out of that engine (I have 2 of them).

Before you go through all of the trouble and money of (basically) downgrading your engine, I would try increasing your fuel efficiency. You can do that by completing the following tasks:

1. Change your fuel filter.
2. Run a full bottle of Seafoam through your fuel system (just pour the entire bottle into the gas tank).
3. Change your spark plugs. (use NGK BKR 7E)
4. Change your air filter. (a high flow filter will give you more air, which means higher efficiency and more power as a result). It will also last long enough to pay for itself (and then some).
5. Use full synthetic oil and a high quality oil filter (Mobile 1 makes good ones).
6. Clean your PCV system (Seafoam can do that too).
7. Check for parasitic loss (spray WD-40 (or similar) on all of your pulleys).
8. Use a bottle of Lucas Fuel Stabilizer at least once (to lube the upper cylinders).
9. Clean your Mass Air Flow Sensor. (you can easily do this while you're changing your air filter).

If you do those things, I can guarantee you will see a vast improvement in gas milage (unless you have internal combustion issues. IE bad rings, etc.).

Those are all general maintenance items that you will have to do with any engine, so you aren't really spending any unnecessary money by doing them.

G/L w/everything.