Ya can always go for one especially with beetle as ther are a whole range of beetles used for offroading/rally that are called as Baja Beetles. They are very capable rally machines.Storm can explain it further as he gotta expertise over VW's.
Old Toyota/Datsun rear wheel drive variants are good to start from, but it needs lot of technical expertise, time and money. But the result is always quite worth in competition events. But do keep in mind incase one isnot that much technical sound, such projects could be a pain in the @$$.
I was myself thinking for converting my Charmant for rally optimization but ain't worth the effort and money in my case. I was unable to spare that much time standing just above mechanic's shoulder.
If you want a project vehicle I am willing to give my Charmant for the project purpose which I offered to some of my pals at pakwheels today aswell.
Look for a Datsun 120Y/Toyota-82/Charmant/Corolla 74-78/StarletKP, and other vehicles that donot involve electrics. And preferably find something less then 100k and spend around 100k. Strip everything so that its power to weight ratio turns out to be gudd. Such rear wheel drives will then fly over the dunes provided a reliable and powerful engine. A two door corolla can be very gudd for such purpose aswell. Put a gudd 1.6 and gudd suspension and tyres and there ya go....
Thnxx..