I suspected that there would be plenty of VW expertise here, its good to know I don't have to go elsewhere for advice.
1) I recently viewed a video that had very bad reviews of the EMPI disc brake upgrade. It seems that there is about 30 thousands of flex in their casting. I have just about decided to replace the brake shoes rather then to do the disc upgrade. What I have found is the the front end of the car is so light it doesn't make a lot of sense to change the front to disc brakes even though almost all cars rely on front wheel braking the most. If I decided to upgrade the rear brakes to discs I am not sure how that will affect the master cylinder or if it needs to be replaced. I have not determined if I should replace all of the flexible brake lines yet.
Empi makes mostly junk. The later model bugs had a dual reservoir master cylinder. You want that one. A good kit will come with one, but not always. Check with CB Performance- I think they have a higher quality disc brake kit, but it has been a while. The front is lighter, but it still takes the brunt of the force when stopping. I would go discs up front first.
2) I would like to replace the existing fuse box. The old style ceramic fuses are probably ok but it seems to me that the new style fuses are more reliable. I found a new style replacement fuse box at CarolinaDuneBuggies but it is listed for $123.00 which seems a bit expensive. I expect I could cruise the junk yards here and fine a suitable fuse box pretty cheap from just about any model car or truck. I haven't been in a junk yard for decades so I don't know what to expect these days
You can get complete wiring kits fairly cheap. $123 isnt bad for a fuse box, but make sure its got plenty of fuses. A lot of the dune buggy stuff only has the basics and you might want extra fuses for lighting, stereo, etc.
3) the rear shocks are currently air shocks. They seem to be holding pressure ok but at higher pressures they raise the back end and force the wheels to turn in at the bottom. I won't know any more about the suspension until I get the car in the shop on a lift and remove the wheels so I can get a better look. I'm pretty sure that there will be suspension parts that will need to be replaced. More later when I get more information.
Sounds like you have a 67 or earlier frame with the swing axle. 68 and later had IRS rear. 68 had King Pin front and IRS rear, then 69 and up they went to ball joint fronts. The ideal setup is the 68, but for just the rear suspension 68 and later.
4) I ordered am EMPI shifter, its a clone of the orginal Hurst shifter I had in my 66 Beetle. I am waiting on the parts to replace the rear shift coupler and I already have the front (Heavy Duty) bushing kit replacement in hand. This should totally tighten up the shifting issue.
You can also get a short throw shift kit which has a different bushing- as long as you are changing it out.
More later with pictures as I move forward and incorporate your comments/advise.