Honestly, having met you only breifly once Brian, i would say it would be better to throw a new head on it and a 3" straight through exhaust.
The reason i say this is that a second hand engine with a waranty will be around $4.5k for just the motor. You may pick one up cheaper, but a few thousand K'smore on the clock and you may be in the same situation you are now. 2LT's are good like that.
IMHO the best investment for your hard earned cash in this situation is a new head
For the 1kz i did recently (3l turbo diesel surf), it cost $1200 for a new head. That included getting all the valve gear from the old head swapped onto the new head. We were told it would have cost $300 to have got the head fitted. Half way through the job i realised $300 was an exceptionally fair price for getting that head fitted.
Give Tauranga repowers a call, see what it will cost you to get them to give it some TLC. You will gat a warranty with it aswell.
Then once you have it back on the road, get it booked into an exhaust shop ASAP and get a 3" system fitted.
Then some tow hooks and mud tyres and come out in the mud with us
