There'll have to be an inquest, and those responsible will surely get their marching orders. It must have been a rare slip in the otherwise well oiled Audi product development process: how else could an engine like this have been signed off, produced and allowed to get into the wild.
Bad news then? No, not a bit of it. The S3's powerplant is absolutely fantastic: raw, animalistic and completely unlike any engine that's graced any other modern Audi - RS4 and S6 included.
Starting with a brief to extract a bit more clout from the already rather good 197bhp T-FSI engine, you get the feeling the engineers had a bit too much coffee and got carried away. They weren't content with a larger turbocharger, so also added a bigger intercooler to increase air flow. So far, so fair. But then they started to change internal bits of engine in their quest for more power. Imagine the reactions of the bean-counting accountants in Audi's Ingolstadt headquarters when they realised the new S3 gets new piston rings, reinforced con-rods and a reworked cylinder head. An especially impressive level of commitment when you remember that the only component changed to tune the previous S3's 1.8 litre turbocharged engine over the stock 150 bhp version was the black box computer.