It would, possibly, be the beastliest little hot-hatch around. Not in the near-wagon sense of the Focus RS/ST or Mazdaspeed3, but in the truer, classic sense, as the A1's platform should allow for something suitably lightweight to be built from it, even in all-wheel-drive turbo form.
At this point, it's little more than rumor and speculation, though the RS 1 has been part of the talk for more than a year now. If it is built, the early side of the production would come during calendar year 2012. Power, if sourced from the GTI's turbo 2.0-liter could top 200 horses, as that's what the 2010 GTI gets, along with 207 pound-feet of torque. That's not much of a gap on the twin-charged A1 1.4 TFSI (nee S1 but for a lack of quattro), so it's possible Audi could turn up the wick a bit to get nearer 220 horsepower. Considering additional drivetrain losses with the quattro system on board, an RS 1 would likely require something in this range to meet performance targets.
We'll keep you posted as the idea firms up, though we Americans will almost certainly miss out on the car should it come to fruition, as we're not slated for the A1 in any form until its next generation, sometime around 2015.