I would think that this is a job for the consumer protection folk. If a main dealer has repaired your car then that repair work and parts MUST carry some form of warranty. I'd enquire about that situation first from Seat customer services - both halves of the repair PARTS and LABOUR. The fact that Seat UK decided to go 50-50 with you ie parts they pay - labour you pay should, as it seems that Seat are conceding that their design wa partly to blame - and I'm sure this is why they helped you and not just a "good faith" payment - should not make any differance at all. In fact as a consumer, you might take the view that they have saved themselves a fortune by carrying out this repair in this way - ie by supplying the parts at their cost, your garage is left to foot the re-build bill - or you at worst. I've always thought that if I ever ended up in this situation, it would be best to fight them from day one and lay down a set of rules that agrees to the manufacturer contributing to the total job cost - and not just squeaking out by paying for the parts - and then saying "well we did our bit" - "you're on your own now". Unfortunately you now need to buy a run about until this is cleared up and probably talk to the consumer protection people as you were sold this service (the repair labour) with some form of invisible limited liability - ie warranted workmanship.
This sort of thing, if all the facts are true and clear, is what should force UK car buyers to gang up and trash VAG all the way out of UK - other countries can do their own thing.
For anyone that has had only good service from VAG products and franchised services, you may think that this statement is grossly unfair - but just wait until it happens to you - remember in a world of free trading and free competion, a company is only as good as its worst action! Just like we are all judged by banks and employers etc.
I'd be amazed if Seat UK or VAG really want you to end up in this situation if you have not contributed to being the partial or complete cause of this. Maybe you need to talk first to the repairing main dealer - it was a Seat dealer I assume, I'd start with the service manager followed by the dealer principle, then pass all correspondance to Seat UK as that is where this action should end in the VAG UK network. After giving them adequate time (see consummer protection folk for a definition of this), I'd talk to the papers - they might like this story, but make sure you have all your facts and be honest completely as you will only have one shot of getting their support. Are you in any of the big motoring organisations?
By the way watchdog etc are only interested to making a good story - you would need at least a couple of hundred signed statements from Seat, Skoda and VW owners of cars that use this engine and have had similar experiences to make an impact to impress watchdog.