Sam,  It depends on whether you going to do the work yourself or not... and
that would likely depend on Whether or not you depend on the van for regular
transportation.  Based on my experience and research:  If you do the work
yourself your looking at about $180.-$300. to replace head gaskets -the
differential in cost is due to the possibility that you will want to replace
various hoses, thermostat, and water pump while the engine is drained and
open.  It will cost you about $800.-$1000. to replace the heads if you do the
work.  To replace the engine with a one from Boston Bob's Engine Exchange (my
recommendation if you choose a new engine- keep it original, keep it VW, get
it from Bob) will cost you around $2000-$2200.  To have this work done for
you will up the bill to $450-$600, $1400-$1600, $2500-$3000 respectively.

Although I am not a mechanic I am willing to try my hand at most anything.  I
am currently doing a head reseal on my '86GL after a cylinder seal failed
allowing combustion gas/presure into the cooling system.  I paid for 2
previous reseals when the van was my daily commuter but decided to try it
myself this time.  Given the published material in the Vanagon.com archives
and other sources it has not proven to be a difficult job.  I started mine
about 3 weeks ago and have got about 9 hours in it so far and I anticipate
another 8-10 hours to complete at my slow meticulous pace.  Most of the 3
weeks has been in waiting for parts which I have decide to replace "while Im
at it".  This gets back to my point about depending on the van for regular
transportation.  Mine is basically a toy since I moved to Maine from Texas.
I get it out in May and drive it about 4K miles a year and put it away in
October.  I can afford to have it down for months in repair-  for me working
on it is play.  If you need the van to get to work than you should bring it
to a good mechanic who will get it right the first time and back to you
within the week.

What ever you decide you do have the list community behind you.  Folks like
Bob and Ken Wilford and many others have been very helpful in keeping list
member's vans on the road.

Good luck!
Eric Small
So.Portland. Maine
'86 GL Weekender