Oh Well maybe not yet:

My engine is dead (as far as I'm concerned). New heads,water,oil 
pump ,etc are needed.  I know that these could be fixed, but I just want an 
engine that will be trouble free for at least the next two years.
For an hour today, I actually decided to sell my Vanagon and buy a 
car. But cooler heads prevailed.

My question is: is it worthwhile to drop a new engine into this 
puppy. I just had one cv joint replaced and the rest repacked plus a 
new pilot bearing installed and the transmission checked (Clutch at 
70% of new). There is only minor surface rust on the body (not in the 
wheel wells or the undercarrige) and I just bought two new light 
truck snow tires two months ago.  The pipes from the radiator show 
rust back toward the engine.

I figure the cost would be around $2,500 for the engine/installation. 
Is this a reasonable figure? Is it best to buy from VW with the 
10/100,000 protection or go with a rebuilt? 

Any help would be greatly appreciated.