Sorry to hear the news.  Earlier this year my '87's head gaskets started
leaking  at 100k (sound familiar??) but the van was in beautiful shape and I
want to keep her forever, so I
decided to go for a rebuilt.  The garage recommended GEX, and it ran $2300.
 When all was said and done (installation, clutch, exhaust system, etc.) the
total was just shy of four grand.  At about 3500 mi. (and 1,000 from home)
one of the heads started leaking.   It was under nationwide warantee, and
after a little aggrivation (delay) they sent the shop a new head which they
charged about $350 to install.  I got about $300 from GEX a few weeks later.

Anyway, aside from that I've been very pleased 13k later.  I don't know what
year you've got, but I know the H2O engines are expensive.  The dealer told
me a VW rebuilt installed by them could run as high as 6 grand!! Good Luck.