The only reasons to use air to water are:
1. Drag racing - pack the reservoir full with ice cold water or a coolant, do a pass. Drain, repeat.
2. When due to the engine design there is physically no way to fit an air-air intercooler. For example roots blowers that sit right on top of the manifold, and stupid stuff Audi did with the 4.0TT.
That's it.
An air-air intercooler is at least twice as efficient.
First reason is, going air-water-air is always going to be much less efficient than air-air because you need to do heat transfer twice! Hence why for drag racing you pack it full with chilled coolant, then you only have to go air-water and it's below ambient (but obviously once it warms up it's useless).
Second reason - keeping the coolant actually cool is much, much harder. Because the engine bay is constantly heating it up. So usually the coolant is way above ambient all the time. Further more to prevent the intercooler pump from wearing out very aggressive hysteresis is used to turn the pump on and off, so if you don't floor it for a while, usually your core is always going to be at least 20C above ambient. Compare that to an FMIC that gets cooled way down the moment you start moving and does not have the massive inertia of the water.
This is the case on all OEM systems. Audi 3.0 supercharged, VAG 4.0TT, BMW N63/S63 and MB. Although MB runs cooler than VAG and BMW solutions, they managed to have better separation.
On a 1.8T Audi TT you can fit a huge FMIC. It's going to be better than any air-water solution. Even for drag racing, it's enough to just CO2 blast the FMIC and it's almost as good IAT wise as the air-water.
Thank you very much for the information. As you are likely aware the FMIC is far away from the turbo in the TT, so thinking the air to water was a good idea to remove any lag. I do have a lot of space above the trans, because I moved the wire condiut under the fender. The battery will sit (intended) beside the wheel/wheel well at the rear. And I'm hoping to put the airfilter under the fender too down where the second intercooler on a quattro would normally sit. (US Driver side) If FMIC is better option would there be much benefit in installing it similar idea to the Subaru and maybe put airflow through the bonnet/hood? I guess now you're introducing heat from the engine/trans to it. Also I live in Houston TX so the heat here every day is around 36 to 40 degrees centigrade. We are at sea level though. Hmmm.
