Germans were so creative with the old aircooled Volkswagens. The same concept of the above mentioned cooler applied for the heater, air from engine fan blowed into heater boxes. This was fine for normal weather, but for those in extreeme cold they had what they called 'Eberspacher'. It was a flame burning heater that worked off the gasoline from the fuel tank. In the Beetles it was mounted in the trunk (front) right next to the gas tank (yikes) and there was a "chimney" duct that came under the fender well. The buses had them in the rear.
Those babies would keep the car
VERY toasty.
This is a picture of one mounted in a Beetle
This link gives a closer look to what it looks like (the ones shown is for a bus or a Type --3)
http://www.type2.com/library/heating/b2pics.htm
Just yapping away.....