Jon:

there is a much less expensive way to go (assuming your engine
is just tired - approximately 150,000 miles with reasonably 
good previous care) it is the equivalent of a top overhaul 
and should cost well under $500 for parts.

What is involved is removing both heads and having any welding
and resurfacing done in conjunction with a set of new valve
guides, with the valves and seats reground.  (RIMCO does
excellent work and charges $150 for the valve job with head
resurfacing or $250 if the heads require welding.)  After the
heads are removed the piston and liners are removed, all parts
cleaned, the liners honed, pistons reinstalled with new rings
and gaskets, and the engine reassembled. (A gasket set is $150, 
rings are $29.95, and rod bearings are $7.95 (parts are 
available from MOFOCO).

This can be done with the engine in the Van, but I recommend 
removing the engine and placing it on a stand.  Additionally I
recommend purchasing the two piece pushrod shrouds.  If there
is a list member nearby, you might be able to solicit some 
assistance.  It is a weekend job if you have a spare set of 
heads (I may be able to lend you a set if down time is of
extreme importance).

Regarding the catalytic converter - the first step is to remove 
the converter and gut it.  You may find that will cure the
majority of your engine blues.  A well tuned engine will just
barely pass the emission test with a gutted catalytic.  I have
2 '84 vanagons with one good cat and one gutted cat.  Whenever a 
problem occurs, I just switch for the test - takes about 30  
minutes.  A new catalytic converter here in Fairbanks is about
$150 from FLAPS.  I can't imagine that it is any more wherever  
you are.  In your defense, checking around last year for a cat
I found prices varying from $140 - $750.  The inexpensive cat
will last for 5 years or more.

Ask if you have any more questions.

Fred