In Norway there has been talk from the DMV equivalent [1] that people who don't have their cars updated in the recall will have their registrations cancelled. So if you keep driving, the police will stop you. Automated license plate scanners and all that, I don't think many will skip it.

What's more likely is that if many people feel their cars are sluggish after the update, aftermarket diesel tuning will become (even more) popular.

[1] Source (in Norwegian): http://www.vg.no/forbruker/bil-baat-og-motor/dieselskandalen...

States with state inspection could plausibly require proof of some form that the update has been applied. States which use OBD-II diagnostics should generally already be capable of doing this by reading the CALID supplied by the ECU (it's part of the standard), so they could work off of that.

Hell, if we're lucky maybe the testing center can flash the update themselves right there on the test rig over OBD-II if the car doesn't have it. Would save everyone- the State, the consumer, even VW, a lot of heartache in handling a mandatory update.

Or a nice market for VW diesels might develop in non-inspecting states.

They already effectively are. Aftermarket ECUs that completely ignore emission standards are (and have been) widely available.

It could be quite easy to enforce through registration data and refusing to renew until proof of a fix is provided.