E34/M50- rebuild the engine, or swap for another used engine?

[Knute Ream <knute@xxxxxxxx>]

I've been postponing the inevitable, dutifully adding a quart of oil every 
time I fill the tank, but now that I'm down to only about 250 miles per 
quart, it really is time to do something...  (Yeah, I could go a little 
further, but I'm not crazy about being a gross polluter- time to fix it)

Here's the situation:

I have a '92 E34 525i with the M50 engine, no VANOS, which BMW did not see 
fit to build with a knock sensor.  This was a bad thing, because the 
Conforti chip which I put in back in '96 ran fine until the declining 
California octane took its toll, and I did some serious damage to the 
head.  (oops!  it actually chunked.)  I had Stanford European (Palo Alto, 
CA) rebuild and replace the head, and should have just had them do the 
whole engine at that time, but they were pretty confident that the bottom 
end was fine.  Nope!  No drips on the driveway, but the oil consumption 
continued to rise, and it's running less and less smoothly.  Smoke is most 
noticeable at high rpm.

Fast forward to now (a couple of years later, and only about 4K miles added 
since the head- this has been a backup car, more recently pressed into full 
time service).  It's been I can't really sell the car for any significant 
value, because there is ZERO chance it will pass smog, and I'd rather fix 
it anyway because the rest of the car is in good shape.  (Dinan suspension, 
new R134 A/C, new radiator, new fuel pump, new rear shock mounts, etc. etc.)

I can do one of the following:

1)  have the engine rebuilt (potentially VERY costly if done locally)

2)  purchase a rebuilt engine from somewhere (does anybody have experience 
with Bavarian Engine Exchange, or Bavarian Auto Recycling, two of the 
places that seem to advertise rebuilt engines?  Better sources?)

or 3)  swap in a used engine (Stockton Auto Recycling has several with good 
compression, one of which has only about 65K miles on it, for $1,600 
delivered)    What should I reasonably expect to pay in labor for the 
swap?  Any better suggestions on sourcing a trustworthy engine?

Any and all insight from you folks would be greatly appreciated!

- -Knute

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