At startup pressure is 70psi then drops down to 35/30psi when idling at a steady 800rpm.
Will driving it with the pressure at 20psi do harm to the engine?
That sounds normal for cold pressures. So when it's hot, it drops to 20psi at 1500rpm, but pressure increases with revs? If that's the case, the oil pump is working as it should but I can't find the oil pressure specs for the GTI engine online, so can't tell you what numbers you should be seeing when hot.
Regarding the above, oil pressure is created by the resistance to flow, i.e. rod/main bearing clearances, cam bearing clearances, and the little holes that feed tappets and tensioners etc. If any of those things leak or wear out, oil pressure can reduce. You would know if you had worn out con rod or main bearings though as the engine would have a few death rattles......but having said that.....engines suffering from sudden oil pressure loss (such as blocked pick ups) can massively accelerate bearing wear.
Yeah, you would need a rebuild or new engine if the above is the case