Thanks for posting this request; my parents received this letter, too and didn't know what to do. And I'm curious, too. Before you take your car in for work, you should consider that there's something very fishy about this "recall".
First of all, you may have noticed the other stuff in the envelope included a "reimbursement" form. If you read the recall letter and this form carefully, you will see that you are going to be expected to pay for the repair work, for which you will be reimbursed (later, after having sent in the form) only if you can prove that you have rigorously maintained the car according to VW's service schedule. You must have saved all receipts, and they must be for exactly the recommended services (or maybe more service, presumably), or you'll get nothing. My parents more than the required number of services, though not at the specified intervals. It would be very easy to say they didn't meet the reimbursement requirements.
My understanding is that work for legitimate vehicle safety recalls is always free, so right off the bat, I'm suspicious. But to add to my suspicion, I could find no mention of this problem on either consumerreports.org or the NHSTA web site (there were four Passat recalls listed, all of them fairly old, and none of them matching the description in this letter). There was no safety recall information of any kind available on the VW web site (they just don't seem to make this available).
I have not called VW to ask about this letter, but I strongly suspect that (1) it's at most voluntary, and (2) it's somewhat of a scam to make some money. If there were a legitimate safety issue, they could not handle it this way (i.e., by requiring up-front payment with stringent conditions for reimbursement).
If anyone gets around to finding out more about this, please let us know. Until then, I've advised my parents to save the letter, but do nothing.
Rose