Yes. It is sometimes called "Stealthback" because you can't tell from looking at the back of the car that you've modded the exhaust. That is what I am doing. See mods in sig below.
As to performance - the answer is also yes. The stock CBE flows extremely well up to the maximum capabilites of the stock K04 turbo's exhaust discharge. The restrictions are all upstream of the CBE and they are significant. The stock downpipe is too flat and does not allow hot exhaust gasses to expant and transition smoothly into the midpipe. And it is too small and has a low-flow cat. The stock midpipe is also too small and has a low-flow secondary cat.
You really need a 3 inch bellmouth shaped downpipe or one with a divorced wastegate design, but you do NOT need a 3 inch CBE. Let me explain. When gasses exit the wastegate of the turbo, they are extremely hot the hotter the gas, the farther apart are the molecules, so the volume is greater for the same mass. So, it needs a bigger pipe to avoid resistance. But as the gasses begin their way down the exhaust system, they cool and become more compact for the same mass of flow. Thus, a smaller pipe can flow just as well as a larger one.
You will see a huge improvement in performace with a 3 inch downpipe and racepipe. You will see virtually no increase in performance on the stock turbo on pump gas by changing the CBE. Only a change in sound.
BTW: Be careful if you install the dp/rp. It will greatly increase the likelihood of nasty boost spikes or overboost if you try to run it on the stock tune. I did not get overboost, but some have. I got nasty boost spikes up to the 21 psi range. At 22 you should encounter abrupt cut. I think these spikes are dangerous and overboost certainly is.
This mod also puts an extreme demand on the stock fuel pump, which is marginal to begin with. You really need monitoring software to make sure you are safe with this upgrade, that you are not running into excessive boost issues or that the high pressure fuel pump is not letting you down. If you exceed the pump's limitation, you can lean out and blow the engine.
Others may disagree, but my advice is to safely run 3 inch dp/rp, even into the stock CBE you need to also add:
1. Some way to monitor engine operating parameters, expecially boost and fuel rail pressure.
2. Upgrade the internals on the stock fuel pump. Upgraded internals have larger pistion and cylinder so that greater volume and pressure can be obtained per stroke of the pump. This will keep pressures reliably above 1600 psi under high load conditions.
3. A tune that will prevent the overboost and boost spikes. A tune will also work with those exhaust mods to build even more power -- safely. You can accomplish this with Hypertech, as I have done, with Cobb AP or with Versatune, all depending on your goals and objectives. I think Hypertech will get you 95-99% of the maximum performance out of your mods and is extremely safe. The other two choices might get you a tiny bit more power, but at the risk of unsafe operating conditions if you or your tuner do not know what they are doing. Hypertech is plug and play.