There's a couple differences to be aware of. The VW uses a timing belt and a rotary injection pump. They use the same 115 bar injectors as the OM616 and N/A OM617. I have a couple injectors with VW and Audi logos on them in my stash of eclectic things. If the timing belt is aged and there's no record of its replacement, consider replacing it proactively. The early VW diesels were indirect injection like the OM616 you're familiar with, but instead of a prechamber like Mercedes used, VW went with a swirl chamber. Similar concept, different execution. The VW design is definitely more "modern" than the Mercedes design.

In the late 80s and early 90s, the VW Rabbits were everywhere around here. Gas and diesel alike. I haven't seen a Rabbit of any flavor in several years though. It could just be down to them not having the same following as the Mercedes cars of the same era. I live in a town of roughly 20K people, and not a day goes by that you don't see at least one W123 or W126. Always a diesel.

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Current stable:
1995 E320 157K (Nancy)
1983 500SL 125K (SLoL)

Gone but not forgotten:
1986 300SDL (RIP)
1991 350SD
1991 560SEL
1990 560SEL
1986 500SEL Euro (Rusted to nothing at 47K!)

Gone and wanting to forget:
1985 524TD 167K (TotalDumpster™) [Definitely NOT a Benz]