re:  He had the person who installed it disconnect the AC and cruise
control on the new engine.

This is really strange information.  It probably just means these
things are broken and don't work.  Nothing about cruise control puts a
"strain" on an engine.  The cruise control is not a VW item (VW didn't
offer cruise control for '80 Vanagons) but rather an aftermarket thing
from some company that is now probably out of business.  If, as I
suspect, this is the case, it's just irrelevant and something to
remove and throw away.  If you really don't want air conditioning, you
should take it out too and sell it.  If you do, sounds like it will be
expensive to get it going again.  For a 1980 model, it is, again, an
aftermarket and not a VW item.  It will almost certainly require a
refrigerant recharge and will certainly require R12 refrigerant, which
is now really expensive.

If you want to eventually sell the Van some time after you purchase
it, the $5000 price may be too much in that you probably won't get it
from the next buyer.  However, this van can only really be compared to
other Vanagons because, in my view any reasonably sound VW Vanagon for
less than $10,000 is one of the world's great bargains in comparison
to what else is out there.