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Many years ago, I knew a guy who did a couple of similar conversions. He was tired of how slow his VW Bus was while going up hills, so he installed a Fiat 124 DOHC engine in it, with the radiator mounted off to one side in the engine compartment and a big air scoop on the right side of the Bus to keep it cool. The bellhousing adapter was made of marine plywood and the clutch fit together with all stock parts---they were the same diameter so it was quite simple to bolt it up with a Fiat pressure plate and a VW disc and bearing. It all worked so well that he did a couple more for his friends.
Several years ago, at the Carlisle PA import car show, there was a Fiat 600 with a 124 DOHC engine in it, which stuck out even further than the B18 in the Beetle.
What Gary L is describing sounds like the European version of Rallycross. The track is more than a simple oval though---it is usually kidney shaped, so that there are turns in both directions, and short (1/4-1/2 mi) with often but not always a paved segment and a dirt segment. Monster cars were not unusual---VW Beetles wih Porsche 911 engines and the like. In England, in the early 80s, there was a notorious Skoda-Chevrolet, which was a small rear engine fastback coupe (S110R, I think it was called) with a 350 in it, hanging out the back if I remember correctly. The concept was by no means limited to rear engine cars---Ford Escorts (the original RWD kind) with hot V6s in them were plentiful, and there were all kinds of other weird engine swaps. This was in something of an "Open" class, there was also a "Stock" class, in which the engine could be tuned, but had to be the same kind as the car originally came with.
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