Ok, i have mentioned this on a few posts before.
My old car was a very nice tuned 200bhp Diesel, the method you are talking about is what the diesel boys call a mufflerectomy. First off on a diesel there is no emissions test, so there is no real requirement at prersent to have a cat, in fact they end up so coated after a few years there ineffective anyway. So yes you can bin that straight off. There is also a need on diesels to have the back pressure as low as possible and your guy is right in that you can lose the boxes too. it does increase in sound, but its usually a nice deep growl under accelration. The only downside is it could be a bit droaney inside the car at speed. All cars are different. You should also be aware that the Turbo itself actually acts as a silencer anyway
It should not smoke anymore as the exhaust does not reduce the smoke on a diesel ( well of that era anyway) the only reason diesel will usually smoke more is due to being remapped where the usuall stance is chuck in as much fuel as possible, the smoke is the unused dirty fuel coming out the system. Or alternatively if you are runnng on Cherryade which i am sure you would'nt do, even though it is only 40p a litre as apposed to 99p for normal......
Go on try the mufflerectomy. If you have a search on
SEAT Cupra.net under mufflerectomy you will get some more info