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For the intercooler an OEM S3 intercooler is the wisest/cheapest choice for your setup - no more no less. I would suggest though to upgrade your fuel pump if you upgrade your intercooler. Pumping colder air in the intake means more aggressive operation thus more need for fuel. Combining a larger intercooler with a cold air intake without upgrading the fuel pump will make your car run too lean.
 
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straight swap yes, comes with a couple of new pipes.

Insurance wise.. yes, always tell them, unless you like driving round with no insurance...