Engine swaps can be a lot of fun, but the real question is- what so you want to wind up with- an M38 or a "bitsa"? Just for fun if you can get it to work the VW engine would probably be as good as the Willys, if not better...but then there's the question of really getting it to work...and of course putting up with all the "why'ja do THAT?" type of comments.
If an accurately restored M38 at MV meets, etc. is your goal I'd ditch the VW idea, but if you don't intend to get into that sort of thing, then... remember tho that that puts you in the role of chief engineer, research & development department, works prototype department, and test driver. And of course, financial support department. And BTW...are you married???