My top pick for an engine would be a diesel. My top pick for a gasser was a 1.0l 3cyl Geo engine (also made by Toyota) mainly due to the size and weight. A VW bug engine was also very very high on the list! I live in Oregon and we have a wealth of Bugs, there engines and the hippies that go along with them.

There simplicity is a big plus... but I believe there best attribute is the number of different applications they have already been retrofitted for and the amount of available parts for performing those retrofits. Like you mention people have put them in airplanes so they have already worked out the mounting and drive linkage issues. I like the guys that run them on two cylinders and use the other two cylinders as an air compressor pump... cool idea! I don't know my air cooled VW engines very well but the lower displacement ones seem to be pretty cheap since people always want to upgrade to the larger displacement engines.
I can't find a lot of info on the TUD5 other than it is a Peugeot.
Yes! I have considered using a hydrostatic pump to drive the accessories. My dual pump has some standard SAE mount on the back for adding another spline drive pump. I think a variable volume pump would be excellent for the versatility it would give you! How many accessory hydraulic circuits are you planning on having? I would imagine a high volume circuit for the snow plow and some lower volume circuits for raising, lowering, tilting etc. What are your thoughts on running two accessory pumps vs some kind of spool valve?
I have no hands on experience with hydraulics... just a whole lot of reading and research. That said: I really like this pump
http://www.surpluscenter.com/item.asp?item=9-7686&catname=hydraulic As a low volume accessory pump. I have visions of proportional speed control on raising/lowering arms etc. At $129 I can barely pick up a hydraulic valve for that. .43ci is too small for any drive application I can think of... but perfect for moving a large cylinder... and they are reversible! It seems like the pump could almost pay for it self just in the cost savings on hydraulic hoses? (Yes, the volume differential in the side of a cylinder with the shaft and without the shaft does give me concern).
Are you thinking one chain to drive both pumps or one chain for each pump? How will you drive the accessory pump(s)?
I agree with the hydraulic wheel motor for your application. The amount of complexity and failure points it saves will hopefully outweigh the speed issues. I haven't come across wheel motors with a lower displacement than 7ci in my searching... although I wasn't specifically looking for any. A 17" spocket seems like it should give you a pretty decent top speed. I guess it all depends on what your target top speed is. My target is a top speed of 15mph with a run speed around 5mpg.
You lost me on the SU carb and the 1.75" hif carb? I am not familiar with those? I was thinking along the lines of a Weber carb as they are popular retro fits for many engines like the VW's. After it is running I will probably mess around with converting it to fuel injection.. as I enjoy playing with fuel injection:
Mercedes 450slc with MegaSquirt fuel injection
I also agree with ditching the the gear box for weight and efficiency. I am pretty handy but fabbing the pump/motor mount is a stretch for both my skill set and tool set. The starter is located in the bell housing. If I loose the bell housing I loose my starter mount too. I like having the clutch for unloading the motor during starting and idling. I am worried about my ability to align the motor and pump shafts accurately. I know I can use a coupling like these to give myself a bit of wiggle room:
But, from what I have read I have to get the alignment pretty close or I will be replacing the rubber bushing quite often.
I am a systems programmer by trade... so you can factor that into the weight you give my comments and ideas. After sitting at a desk all day staring at a monitor it is a great stress relief to get my hands dirty!
P.S. I really enjoy discussing this stuff with whoever feels like contributing. A new point of view to consider is always very valuable.
Thank you for your patients with us HiJaking your thread Dave!