I did try and get around to posting a response earlier, but by the sounds of things, you've discovered for yourself by now that the dealer seems to be taking advantage of the situation a bit.
The Magnat amp should work pretty well with the Empeg - we've sold Magnat in the past, and it's pretty decent quality gear. As for your points:-
1) Under a front seat is as good a place as any. You do need plenty of air circulation around the amp, but as long as there's at least some air gap between the amp and the bottom of the seat you should be OK. You can just screw the amp straight down to the floorpan (watching out for brake pipes below the car. Sounds stupid, but people have done it before now - "professional" installers included), but probably a better idea is to mount an MDF board below the carpet, then screw the amp into this (assuming that doesn't cause height problems).
2) Remove the front seat (should be a single bolt or metal clip in the front centre runner, then remove the two plastic runner covers behind the seat with the seat slid forward as far as possible and it just slides back and out). Remove the sill trim (Usually just clipped in place - might vary on the later Passats, but I don't think so from memory). You can then lift the carpet up enough to run cables so that they're completely hidden. You may have to remove the glovebox to get access to the back of the head unit, but it's not usually too difficult a job.
3) Don't bother. Go to any decent ICE dealer and buy an ISO connector that'll plug straight into the car wiring harness, then use this to connect your new cables to - this should either be marked to say which cable's which, or use standard aftermarket colour coding (in which case, get back to me if you're at all uncertain what's what).
If you do have problems with the depth of the Empeg cage, removing the cover plate over the back of the harness should gain you a few mm - just be careful not to strain or crush the cables as you fit the cage. If you still have trouble, the problem will probably be down to the ISO back support bracket at the back of the dash aperture. In most VWs, this is just thin plastic, and can be cut back with a stanley knife fairly easily.
Dominic
Cambridge Car Audio
http://www.cambscaraudio.co.uk