I'm no expert, and have not completed this swap. However, it is probably well-documented elsewhere. I looked into ALH swaps into the Mk3 and didn't get far. There are enough hurdles that it didn't end up making sense to me if you could just drop in a 1Z/AHU engine in an afternoon rather than spending the extra money on the ALH and all the associated bits and workarounds to make it work. VW people love swaps, but swaps are a pain in the butt.
Personally, my car isn't an enthusiast project, it's actually my daily driver. Keeping it mostly OEM allows for easier diagnosis and repair.
As for the swap, it's definitely been done, but in my research there isn't a complete write-up for the ALH into the mk3 from what I understand, but then again ALHs have been put into nearly everything at this point, so most of the questions have been answered. I'll list what I know.
Fuel: fuel system is effectively the exact same between ALH and AHU. The difference is that the AHU has a different pinout for the injection pump but uses the same connector. So you would just need to repin that connector harness to plug into the ALH pump. Everything else should basically plug right in like the glow plugs, sensors, etc. Use the factory AHU stuff. You might need to lengthen some wires here and there. I believe you can use the Mk3 pedal.
This is all assuming you use the AHU engine harness and ECU... totally different story if you want to swap in the Mk4 electronics. That is WAY more work.
Air: ALH intake faces a different direction than the AHU. You'd need to find a PD150 manifold and adapt it to your intercooler piping using a silicone elbow, not the biggest deal but something to consider. Additionally, ALH routes the intercooler piping to the opposite side of the car, so you'd need to come up with your own intercooler piping to route over to the stock SMIC or mount a front mount intercooler. Not rocket science, but just another piece to consider as routing boost piping smartly is important.
Engine Mounts: The stock ALH turbo does not fit in the Mk3 chassis without modifying the rear engine mount to make room for the actuator. There are off-the shelf swap rear mounts available for this – Darkside Developments sells one. That part is easy. DON'T grind the stock mount, as it generally fatigues and fails in short order. Apparently, aluminum doesn't like stress risers!
The front mount is a question mark as I haven't seen it done. From what I understand it should basically bolt on.
Trans: Use your existing 02A trans and axles. Bolts right on to the ALH. Trans mount is retained as stock.
Turbo: The VNT turbo does require a chip tune if you retain the AHU ECU. You'd need to swap out for the ALH N75 valve. Mechanically, turbo boost control is relatively straightforward, hook vacuum lines up as if you were routing for an ALH. Again, the challenges lie in the intercooler routing.
Exhaust: You will need to fabricate a downpipe or modify the mk4 downpipe to either combine with your existing downpipe as the turbo exhaust flanges are different.
Vacuum lines: The AHU uses a block-mounted vacuum pump that runs off the intermediate shaft and drives the oil pump. The ALH has a vacuum pump that runs off the side of the camshaft. I know nothing about the ALH vacuum system.
Power Steering: from what I understand you should be able to hook up the Mk4 pump to the Mk3 rack. That's all I know.
AC: Same deal as the power steering – no idea other than that it should hook up to your system, it's getting the lines ran that is the question mark. There is a pretty in-depth series about a guy who
put a 1.8T into a mk3 on youtube. Lots of good info there. He used the same Mk3 A/C lines but had to bend the hardline slightly to fit the AC compressor since it has to make a harder turn. Pretty sure it would be similar positioning for the ALH. P.S. he only did the swap because he basically got the engine for free and has the fabrication skills, shop lift and all the time in the world to complete it.
Coolant: I believe you'd need to use the mk3 VR6 rad to better line up with the positioning of the coolant outlet. Additionally the coolant bottle sits on the opposite side of the bay for the Mk4.
So all said and done I estimate the cost difference between an ALH swap vs replacing the AHU would be a differential of roughly 1,000-2,000 dollars, pricing in the difference in cost for the engine and the associated parts to make it work. That's not counting your own time or tools. As cool as swaps sound, they can quickly become overwhelming if you don't know exactly what you're doing.
The real benefit of the ALH over the 1Z is the tunability of the ECU using OBD port tuning. But really, how often are you changing your engine tune? Again, swapping that harness over to work with the ALH computer is a LOT of work. That said, various aspects of the ALH engine design remove some of the common failure points that the 1Z/AHU has. That said, I consider the AHU to be a more user-friendly engine in many respects. Namely, I think the timing belt procedure, while slightly more complex than ALH, is easier. Replacement and servicing of accessories is also much simpler on the AHU.
If you like the ALH, just buy a Mk4 with the ALH in it. They are cheap enough now that it doesn't make sense to go through swapping it into a Mk3 unless you want cool guy points and just do this stuff for fun.