Actually, HID's would work in the Fog light housing. You just need to drill a hole to let the wire to the Ballast through.Euro switch is what you'd want to do this, disable the DRL and then use the switch to turn on the fogs without turning on the lights.
Not sure about HID in the fogs, you'd need to install a ballast and a different harness, etc. Can't just stick an HID in there.
If you wanted something different in there I think an LED based light would work and give a different look and I don't think they need special wiring.
No special harness required. The stock connectors hooks into the wires for the HID Bulbs and the HID bulbs run wires into a connector that hooks into the ballast. Really quite simple. The hardest part is finding a location for mounting the ballasts.
I have HID's on my Low Beams and am thinking about putting matching ones in my Fog lights since the HID's are a bright White Light (5000K) and the Fog lights look really yellow in comparison.
Yes, you can use the Euro switch to just turn on the Fogs without any other front lights.
On the 2000 Beetle all the lights are H1 bulbs. Low, High and Fog. H1 H1 H1. Makes things a lot easier.