I also have a 260E (1989) with high mileage. The car is currently at the shop for head work. I hope he won't find a crack in it.
I would go along with a used head. While you are there, I would have the valve guide checked for tightness, put new seals in and install on the Engine. I,d be extremely surprised if there is more problems with rings /pistons/bottom end of the engine. These engine are extremely tough.
If money is a concern (I know what it is), I would put just enough money on it in order that it works decently well, and hope for the best.