I wonder why they sticked to the bi-motor setup.. VWs Syncro awd was an offspring of Audi's Quattro awd, and even though Syncro came out about two years after Quattro, it was at least available for the MK2 platform since '86. That they got faster in '87 was due to using turbos, maybe a single engined turbo Syncro would have been the way to go.
They turbo charged the 1.3 engines in ‘86 too - they got faster in ‘87 due to twin 1.8s with turbos. But you’re right - a higher power single engine surely would’ve offset the weight!
When climbing a hill, an engine in the front isn't good. VW's Syncro system used a viscous coupling as a center diff and Audi's Quattro used a manually lockable center differential.