when we (me and the neighbor) used to work on these, he'd buy two or three and build a perfect one out of the group- mostly cosmetic issues- we NEVER had to go seriously into the motor. sell, then repeat. we did this about every two weeks each summer just for shits and giggles. we ALWAYS put in a high volume oil pump, buttoned her up and sent her on her way.
$1k seems high on labor for a drop and swap for a compatible motor. when you do a reman remember that you have to swap all that crap external on the block. that can be easy or it can suck. Id never consider a reman on a running XJ. run that baby till she dies, then decide.
fyi - if you have a good small impact gun, and all of the connectors let go nicely you can pull that motor in less than 2 hours, and put another one back in 3. put a crank position sensor in it while youve got it out though. but honestly I dont hear you needing that yet.
its cheap, basic and a very sturdy vehicle. if its as clean inside as it is outside, why 'keep up with the Jones' and buy something else? ride that baby.
