Rebuild the motor? Or replace?

[Cunningr]

I would go for the crate engine, maybe even buy one store it until your engine dies. All the work and parts in that engine are worth the $8500.

But you may want to evaluate the car as a whole interior, exterior, and mechanical before you decide on a path. Bonus is you know what you have and will know mech condition after the work you do, on the flip side you will spend more than the car is worth at this point in time.