I know how to do it but Airhead.com explains it better than I can.
As you may have found out the spring plate can be WEAPON stay clear of it.
Buying larger diameter bars from Sway Away 26 or 28 mm will let you install them with little or no preload. Much easier to install. Setting the arm to cover 1/2 the lower torsion cover bolt hole with stock bars usually works. Next you need to install dual shocks to dampen all that new spring tension. Fabricating a bar to tie in the upper rear shock mounts and mount a second set of shocks to it. Also tie that bar into the frame horns where the engine mount bolts to the frame horn.
You need to make something like this but modify it for shock mounts.
Getting a copy of Building Bajas and Buggies is a must. It will explain a lot of this but with pictures.
Here is Airheads procedure.
Start off by jacking up the car and letting it safely down on the jack stands. Double check to be sure itís stable and secure.
Remove the rear wheels.
Remove both shocks.
Use the scribe to mark the position of the diagonal arm to the spring plate (donít skip this step unless you plan on doing a 4 wheel alignment).
Remove the bolts that attach the diagonal arm to the spring plate. This will free the axle assembly and let you rotate it back far enough to give you adequate working area. Pull the brake cables to give yourself the slack you need.
Tie the axle back with a piece of rope.
Remove the 4 bolts that attach the spring plate cover, and pull off the outer bushing.
Warning: the spring plate is still under tremendous load. Keep arms and legs clear!
Position a floor jack (not a bumper or screw type) under the spring plate, and fish the chain under the jack and up to the upper shock mount. This ensures that the car and the jack act as one, preventing the car from raising up as you jack up the spring plate off its stop.
Jack the spring plate up far enough to wedge a screwdriver or small pry bar in at a 45 degree angle. The spring plate will drop 4-6 inches, so stay clear in case it slips.
Slowly lower the jack to allow the spring plate to be guided past the stop by the screwdriver, and to end up at its resting position. Once there, scribe another line to reference the resting angle.
With the protractor, record the angle of the plate, then record the angle of the door sill. Subtract to get the "real" angle of the spring plate.
Now you are ready to make the adjustment. Lightly tug on the spring plate, and pull it off the torsion bar. Sometimes the inner comes out easier than the outer, but donít worry, it will work out as long as the adjustment is the same on both sides.
VW recommends the following for stock bugs and Ghiaís:
17 degrees 30 minutes for short swing axle
20 degrees + 50í for 67-68 long axle and IRS
The outer spline has 44 splines. Moving it 1 spline will move the axle approx. 2-3/8"
The inner spline has 40 splines. Moving it 1 spline will move the axle approx. 2-9/16"
(Get your calculator out...
Inner splines - 40 - each one represents a 9* movement.
Outer splines - 44 - each one represents an 8* 10' (minute) movement.
Smallest change is 50' (minutes) which will give a 5.5 milimeter drop/lift. (depending which you want)
There are 60 minutes in one degree.)
Now we see that moving each spline in opposite directions, we can make a change of as small as 3/16" This is where the infinite amount of adjustability comes to light. You can "dial in" almost any ride height you wish (to a limit). Remember though, a change of 2-9/16 is a BIG difference, and the ride quality will suffer if taken to the extremes.
Grease the new inner bushing and install it on the spring plate
Make a mark where you have calculated how much lift or drop you want, and index the splines to get you there, slide the plate home, grease and install the new outer bushing.
Get the jack and chain set back up, and slowly jack up the end of the spring plate. A slight tap with a dead blow hammer will get it seated back on the stop. You can use a "C" clamp to clamp the spring plate to the torsion housing to keep it from slipping off.
Get the cover plate ready, grease and install the outer bushing, and try to get one or two cover bolts started. To line the rest up, wedge a pry-bar in one of the shock tower holes above the middle of the spring plate and then lift up with the jack. This will lower the torsion bar end of the spring plate, and allow you to get the bolts started. A few times, I have had to start out with longer bolts, and then switch to the correct length once I got the plate pressed in. Work the jack up and down to ease in the tightening of the bolts, and torque them to 25 FP.
Now youíre ready to reassemble the wheel assembly. Untie the ropes, swing the diagonal arm back into place and loosely tighten the bolts that connect it to the spring plate. Now, align it to the scratches that you previously made, and torque the bolts to 80 FP.
Reinstall the shocks, handbrake cables and wheels.
Drive or roll the car enough to let the wheels get back to their resting place, and make some measurements. If everything is as it should be: Sit back, admire your work, and be proud that you did it yourself!