As I stated above, once the head is off and the tension in the bolt is relieved, you can probably back the rest of the bolt out with your fingers.
As you also stated above, that's fine and dandy without consideration for rust or thread-locker holding the threads. Hopefully that's not the case for the OP and your method will be perfect. I'm not saying it won't work. He asked for preferred methods and I'm just stating mine.
Yes, maybe if the transmission was out of the car it might be the easiest and quickest. Do us a favor. Jack up your Passat, pull off a front wheel and take a look at where the bolt in question is located. How do you propose to get a drill in there without completely disassembling the suspension?
Once I'm home from work, I guess I'll have to take a picture for you. My Passat is currently on stands with the wheels off. I just barely pulled my axles as part of a 5 speed swap I've been doing over the last couple of weekends. I used my impact gun to pull the flange bolts out. I'm pretty sure a normal sized cordless with a normal length drill bit would work just fine. I could be wrong though, I may have used an extension on my impact. Either way though, nothing with the suspension was in the way.
Just imagining the time to drill one hole part way into the bolt head versus the time to grind off the entire head, I think the drill would be faster. Then there's the risk of nicking those weight balanced CV axles with the grinder. Then, if the threads are seized, you'll be grabbing the drill anyway.
Again, not saying what you guys are suggesting won't work. In this case, I have no doubts it would be perfect. I'm not trying to be argumentative either, just explaining why I have the opinion I have. It's just what I would do if it were me; and based on 7 years of mechanic experience and the past few years as an engineer maintaining airbag production equipment, the LH drill bit would be MY "best method."