Fortunately, I can replace the fender with one that I just purchased from Volkswagen/Audi of America. And, thanks to Ron (my paint-gun wielding friend), the color will be a perfect match.
No need for a biopsy here. The obvious cause of this metal rot was the lack of paint on the inside of the fender - looks like Franz der Automaler was chugging the ole Rothaus. This, coupled with the moister-trapping, foam support mounted above the driver's wheel well lead to some nasty decay. To avoid a resurgence of this problem, I removed the foam and Ron painted the back of the new fender. P.S. Better photos to come.