I think the TT made them fashionable and as already mentioned the A3/A4 with the 1.9 tdi engine became more obtainable. So I'd say the metamorphosis was complete by 2003, with the launch of the mk2 A3 (?)
Having sold them in the mid 1980's it was when the Audi Coupe GT came out all the Golf GTI lot moved over on mass, all thinking they were driving Urquattro's, if they could not afford a coupe then it was an Audi 80 GTE in white instead.
I agree with the R8 thing. once that came out all the yoof that would pay £1.50 for their lambo mobile phone wallpaper from jamster decided to get the R8 instead. The ones that liked BMW have moved to audi.