We don't know why Audi have stated all FSI engines, not just the A2 one, are not compatible with E10.
The rest of the FSI engine construction, and the materials used are no different from more ordinary engines. I can't think that fuel hoses, for example, on the FSI are any different from other petrol engines of the time.
My own theory, no more than that, is that it's the exhaust system. The FSI has one C0 cat, directly after the exhaust manifold, where the down pipe would be, and a second, NOx cat further back. This setup is, or was at the time, unique to the FSI, (I believe). The cats themselves, and the combined post cat Lambda and NOx sensor are my prime suspects, not least due to the hygroscopic nature of E10. Especially on short runs, and the fact that the thermal efficiency, when using low octane fuel, means the engine will run cooler than it is designed to
The FSI was designed to achieve a very high thermal efficiency, that's why Audi specified 98/99 Octane fuel. The engine runs at a higher temperature, and has a high compression ratio, so high octane should be de rigueur. Using lower Octane fuel will not give that thermal efficiency, so combustion will be less complete, and the ECU will adjust the timing to prevent pre-ignites, so engine efficiency is reduced.
Like all modern engines, there's an EGR, which mixes some of the exhaust gases, along with the oil condensate from the PCV system, back into the inlet. If fuel, and oil quality, is poor, then that mix of volatile compounds from the crankcase, and soot from the exhaust then flow across the inlet flaps, and form a sticky varnish like accumulation. Flaps seize, actuator breaks etc.
Off course, all of this can be repaired, and if done properly, there is no reason why the engine can't be in good fettle.
Realistically, many, maybe most, FSIs will have not have been run on 98/99 Octane, (A2OC Members excepted). So finding one that has run exclusively on 98/99 is very unlikely.
So if you've set your mind on an FSI, buy with your eyes open, and be prepared to do some reparation, even if the vendor has already done so.
A fault free scan report, is only useful if it was run after an extended drive, with varied engine speeds, and loads. A scan run in a workshop is of very limited value.
A good FSI is a wonderful car. It might need a bit if effort to get is there though.
All of the above is my belief, not necessarily factual.
Mac.