Ed,

If you don't want to drive faster than 55mph then the van your mechanic has would proably be fine.  If he has to assemble an engine see if he would put a 1.6 turbo in it or a 1.9.  The tranny also should be swapped out also if a bigger engine is being put in.  I don't believe there is any additional heat for the rear.  Mine does not have any rear heat either.

I have an 82 diesel Vanagon that I am putting a 91 Jetta 1.6 turbo engine in and also swapping the tranny out with an 82 air cooled tranny.  I have gone through about 5 1.6 NA engines (different reasons why I went through them but I believe mostly because I drive them to hard trying to go 65mph in a 55 mph vehicle.

If you can get ahold of the guy with the 1.9 and he has swapped out trannies then that would be the way to go.

Kevin