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If you are going to have 20 year old cars, you're going to need to work on them. The head gasket replacement is not that bad of a job. Parts would be about $100-$200 depending upon how much you replace. And, alot of people here on the forum have done them and I'm sure would be willing to give you advice as you do the job. Having done several L98 headgasket jobs, I kind of doubt that sealer will last very long....if at all. I would have problems selling a car with known problems without disclosing them.
First of all, why replace the engine? You figure head gaskets = new engine? Or, did the diagnosis include internal damage? Head gaskets can be replaced for roughly $2k, give or take, depending on the shop. A new motor is going to be a lot more than that, especially if you don't go with an L98, (new computer and harnesses).
I have an L98, and I'll share a couple of things that have occured to me. I don't race, and I don't autocross. So, if my car will go 0-60 in 5.7 sec and a new motor gets me to 4.7 would I really notice? Probably not. My L98 has a top speed of 140-150 mph. Where would I ever do that? Nowhere. I can get my L98 sideways in a hurry. It has lots of torque so it still gives me a cheap thrill to stomp it on occassion. I live in a cold weather climate, so I only use the car 5 months out of the year. In this lousy economy, do I, or you, really want to dump a bunch of money into a toy?
Now, here is the bottom line:
If you love the car, refresh it, and tweak it to do what you want it to do.
If your attachment isn't that strong, dump it, they're money pits.
Mechanics (whom I trust) under mutual agreement went ahead and used Blue Devil Head Gasket Sealant on the vehicle. Still not completely sure what the actual cause of the white smoke is but only through driving it around again will I know if the sealant worked or not (which has so far). So not as terribly horrendous as I originally thought. If something comes up again I will be back with a different post.
Thank you 'zr1fred' and 'Relic' for your responses.
You might want to consider replacing the gaskets yourself. It is not to difficult. The hardest part is dropping the distributor back in, getting the timing set and adjusting the valves. The balance is mechanical...un-bolt and pull apart. Put it back together. You would need basic wrenches and a torque wrench. Do you have a good friend that could help? The key to this is...LABEL everything...each nut and bolt....wire and hose. If you have a digital camera....take lots of pictures. Draw diagrams. Put parts and bolts in plastic bags and LABEL. That will keep you out of trouble about 95% of the time.
You are probably looking at about $300-$400 for all the gaskets, sealants and coolants etc.
Even the "hard parts" listed above are not too difficult.
Been there and done that. it was just as described above. getting the distributer back in with marks lined up was a real pain. it took about 45 minutes until i learned the feel of the teeth. the only other thing i might mention is unbolting the exhaust from the exhaust manifold if they haven't been off in 20 years be super careful. it wasn't bad at all. just time consuming. I dare say it was fun all in all.
I too would simply do the gaskets, SB Chevys aren't that tough. While I was there, I would pay the extra few bucks and spend the extra time to do a valve job.