In previous buybacks, manufacturer's paid KBB value for age and mileage, and assumed "excellent" condition. Given that value plunged a year ago, I assume they'll have to base it on the value at the time of the scandal, but who knows? The court documents also say they will be providing additional compensation for time/trouble, which is rumored to be $5K.
Like you, I don't want to put another dime into the car, especially since my 2012 is fully paid for. So I'm searching now and will buy the replacement the minute the VW requires either new tires or maintenance beyond the cost of the $500 dealer credit we already received. It's all a terrible shame, because the car was absolutely everything I wanted -- a wagon with a reliable, long-haul engine that was fun to drive. Like you, I planned to own it for a long, long time.
I've thought hard about the regular gas JSW but they come with three problems -- worse mileage, worse performance and an engine that is often plagued with VW's usual reliability issues. Add that to rewarding bad behavior, and I can't quite go there.
If you buy Audi or BMW, be sure to either have some sort of warranty or a mechanic on call. They're wonderful cars, but can get expensive fast as the miles pile up. The same is true for Mercedes -- it's not just the problems, it's the cost of fixing them!
I've toyed with the idea of a RAV4 EV, which are a bargain these days, but they get killed on resale, so I can't count on anything at the other end. The new Kia Soul EV has an amazing lease deal, but may be too small for the hounds (plus I have to worry about wear and tear) and three years is a long time when technology is moving fast. So possibly a Ford Escape Hybrid (they're used as taxis in NYC and SF and regularly get 300K miles), an Acura wagon or an older Lexus or Toyota Highlander.