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Re: need big time help

   Unless this mechanic comes with high praise, I'd look for another. 
Mobil 1 or any other synthetic usually enhances pressure and performance in
older engines.  I'd say you had a bad leak somewhere if your were going
through oil so badly before the meltdown, low oil should have no impact on
thestructural integrity of your plugs!  If some of the plugs are oiled, I'd
think rings.  It doesn't necessarily sound like the engine is cooked, but a
few tests can confirm this.  (which I would do if I were looking at a
replacement)  Check to see if oil and coolant mixed, cracked block or head
gasket.  Do a wet and dry comprression test to check ring condition.  Check
integrity of oil pump and see if you can track down any obvious leaks.  See
if car can be made to run normally with new/clean plugs and check/listen
for signs of low/no oil damage. 
     As you know the 5 cylinder has a reputation for being bulletproof, no
oil change should bring on your symptoms.  I would go with your suggstion
of a restart after performing the tests mentioned while supervising this
particular mechanic.  On the side, I will sell you an 87 5000TQ with 110K
mechanically perfect for $5,500, my main point being after spending $6k
(probably more once he has you) for a new/used turbo install, you still
have the same gremlin plagued (from your posts) 4000Q that will be worth
maybe $4,500. 
   I don't mean to be to down, but after 4 quattros, I'm really trying to
be supportive and realistic. 
PS I can put my hands on a nice 85 4000Q motor for short money, as can
others on the list if you decide/need to go that route.  I lok forward to
others opinions.