I've slept on it and am sober now...
Any engine swap like a V-8, etc is for the rich or stupid, I'm not going there... not this year.
I'm leaning more towards fixing it. I've now finally sourced several headgaskets (fiber and copper, not sure which way I want to go). Head bolts/studs are the next obstacle.
If I change engines, I'm down to an "easy" choice and a "hard" choice.
Easy is an old 22R Toyota motor with a 20R cylinder head. I can buy a built long block rated at 130 hp (what I have now, but it will have a lot more torque) for $2600, that is assembled (professionally) and ready to bolt in. All I do is add induction (a manifold and reuse my carbs to start). Alternatively, I build one myself and will save a fair chunk of labor charges.
Local Toyota shop:
http://www.doaracingengines.com/4cyl.html
The "hard" engine choice is a 3RZFE out of a Tacoma pickup. Used these aren't going to break the bank, but I will need to do a lot of work. THese are distributerless OBD-II engines, so I will have a lot of wiring to deal with. I will need a truck tranny too (not a big deal, I think they are still using a variant to what is in the car now). In stock trim the 3RZ is rated at 150 hp and 170 ft-lbs. A bunch more than I make now.
I'm leaning towards a minimal investment to get the current engine running again, and in the mean time, start sourcing parts for a "killer" domestic replacement. Maybe even consider forced induction....(probably not).
The car is pretty good as it is now. While more power is cool, I don't really need it. In case folks didn't notice, even with a failing head gasket I was not slow. With an instructor I was able to pull away from Bill Gratton's Miata (he was riding solo), I could do the same thing to Steve's CRX. That is fast enough. Any faster and I need new brakes. Yeah, the V8 would get me to 140 mph at Roebling, but lets get real, I'd kill myself...
Scott