My bro's friend has a dunebuggy that has a bug engine. The bug engine is siezed, and my bro has been eyeballing various options (including my engine on the shop floor)...

What does it take to use the 914 engine with the bug transmission?

I think all you need is the adapter from here
http://www.kennedyeng.com/vw_por.htm

I don't believe you need an adapter plate. I have seen dune buggys and bugs with a T-IV in it. One was Jake Raby's.

No adaptor plate necessary. The motor will bolt up without issue. The factors you'll have to deal with are:

1. clutch, or more specifically, throwout bearing arrangement
2. starter
3. exhaust, but headers will work if you're not picky.

I've done it a number of times. I use a special flywheel that I get from George at European Racing in the Redondo Beach area. I may have such a flywheel available. The Cap'n

Don't know if it will help or not, I have a bus type 4 flywheel on a 1.7 in my garage. It came out of a 72 bus. I'd go with what the Captn says first. He is usually correct.