Thanks for the tips on the hose. A friend in the UK struck gold and found an NOS correct auto hose for me and it's on it's way to me in Adelaide. Not cheap but the car is all original so it's worth keeping it that way.

As for the heater core replacement- it's very easy and you should definately do it as it only costs under $100 for a good heater and a bit of time. Bear in mind I am not a mechanic and I managed to do it without cocking anything up:

1- remove the console- screws either side and gearshift bits (mine is auto so you just pop up the plastic bits to find a single screw there). Easy peasy- you can even remove the console with the seats in the car if they are all the way back.
2- remove the lower dash pieces- screws either side and along the top of each piece- just look for them and within 5 minutes it's all out of the car ready for a good cleaning.
3- remove the glovebox- look for the screws including the ones under little felt plugs inside the lid- another 5 minutes there and your done. Wiggle the little light out of it without screwing it up!
4- pop the front lid and find 3 x 10mm nuts on the firewall- 2 are around the coil area (one above the other with large washers)- look and ye shall find. The other one is across from the coil- passengers side. Undo all of them and you've just spent another 5-10 minutes...
5- assuming the heater hoses are disconnected from the heater, now go back inside the car. Remove the heater slider knobs- pull the suckers out easily. Then remove the whole air control thingo by undoing more screws and it will pop out.
6- remove the central dash vents by unscrewing 2 s screws at the top and with some jiggery pokery it will come out but dont be heavy handed.
7- remove the hoses that attach to the outer vents by being reasonably forceful.
8- undo more screws as they become apparent from the plastic bits and bobs screwed to the main housing- seek them out but there aren't many.
9- I also removed the radio just because it was easy and it gave a bit more visual to what I was doing.
10- I removed the 13mm bolt in the glovebox area that secures the big black box to allow the whole she-bang to move a bit.
11- you should be about ready to wiggle the whole she bang a bit and now that it moves, get a screw driver and pry the metal clips off from all around the 2 x housings- they fling off everywhere if your not careful.
12- your basicaly done now, man handle all the plastic crap out of the way and find the heater core. Remove it, throw it in the bin, then install the new sucker. If your using a MK 3 unit, you will see it's slightly different and you may have to alter slightly- you will see what I am on about when you compare the old to the new.
13- re-assemble the unit with the metal clips- they are easily pushed on with your fingers contrary to what I was told (I have tough fingers though). I also found it was best to re-assemble the upper and lower plastic parts onto the heater housing before jiggling the whole setup back into the location or you will regret it.
14- tioghten the 3 x 10mm nuts and the 13mm bolt first then go forth with re-assembly.

It's a very easy job and not as daunting as you might think. Worth it as the heat in this crap weather makes driving the old beast a pleasure.

I spent a good 2 hours cleaning every item out of the car including the carpets so now my car is 100% as good as it gets.

Any specific queries- email me on aaron@vw1500.com Good luck.