I've got a '98 S40 (pre-USA release) and it has a transponder inside the ignition key that communicates with the ECU when you turn the ignition on. Without this transponder the ECU will not operate. I am very confident that your more modern Volvo also uses a transponder and that remote start will not work. Sounds like you need a block heater instead.
My manual does say that you should not warm up the engine by idleing, it says you should drive it. That said, I have never lived where temperatures go below freezing but can imagine it being nice to get into a warm interior.
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