Yes, good debate
We have to accept that cars are depreciating assets because they don't last forever and consequently have a finite economic life (that's the accounting lesson over!

), so why is depreciation a problem??
I think the real answer to that is that it's only a "problem" if you're in there for the short-term, in which case there's not much point in spending much on mods anyway. But all this applies to any car - the "problem" of course is more noticeable on a higher value car. As far as depreciation on mods is concerned, as already stated - 90% even as they're going on...

If you're not prepared for that, don't spend it or keep all the original parts, return the car to stock when you come to sell it, and sell the mods on separately.
As far as the "mod an S4" vs "buy an RS4" debate is concerned, a few points spring to mind :-
1. Although they're very close cousins, they're quite different cars - sure you can go a long way to getting towards RS4 spec, and can even go further if your budget allows but at the end of the day (yea, I know, it gets dark...

) it will never have the presence, rarity, and power delivery of an RS4, unless of course you go the full RS4 conversion, which only makes sense if you either have a saloon or simply have loadsa cash and time to throw at an interesting project;
2. When saying "you may as well have bought an RS4", this statement can only be made when comparing 2 different periods in time. To explain : if I'd taken the money I paid for my S4 2 years ago and added to that what I've spent on mods and put it all away until now, then yes I could have bought a high mileage RS4, but TODAY - not 2 years ago. You could probably say the same now, looking 2 years ahead - you'd pay £10k to £12k for a low mileage S4 now, spend another £4k to £5k on "modest" mods (brakes, suspension, remap, exhaust, wheels, ICs), or buy an RS4 in 2 years time for £14k to £17k;
3. If you have the budget, then surely it's RS4 every time...or is it?

it may still be a question of personal preference - as some have stated, they simply don't like (or want) avants and would therefore prefer to mod an S4 saloon.