Yes, you actually said cracked head gasket! ROTFF!!! How specific a diagnosis is needed?
It's obvious from your posts trepidation is winning out. Don't allow unknowns to bring on the strife. If finances aren't prohibiting your progress, the only other excuse for not moving forward should be parts availability or lack thereof. You won't know if a cyl. head is needed until it's off and tested. You won't know if only the head gasket is at fault until the ch is off. Head comes off either way, correct? No time like the present.
Listen, strategy is crucial. Your primary focus is getting the drivetrain up to spec. (Yes, this means correcting the ch/hg issue first.) Also, avoid getting mired with "while I'm in there fixes" and unnecessary presupposition. If the coolant system is operating to spec, HEY guess what? You can delay a pricey radiator purchase until it's justified. YAYYYYY! YAY FOR MOAR BEER! Besides, how tragic would it be to die penniless before you got to enjoy the driving experience in your new ride?
Then, when the motor, tranny and brakes are performing as the manufacturer intended, you can safely move onto "correcting" other "important" stuff. Mounting big sassy wheels on your new gorgeous wagon is pretty LAME if all it does is sit...motionless.
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Sir, your wagon is WAY cool. I, too, hope to own a 124 wagon soon. If its condition is as good as yours, all the better. And whooooooeeeeeeh, nothing says 80's like a sweet color-match pinstriped family truckster! You even scored one with the two most desirable options available. Manually drawn rear sunshades and "extreme" candlepower front bumper mounted spots. JK! I couldn't resist. But, can you say "re-purposed" class? Looks like Johnnyboy's old bed sheets and a couple reflectors from those old six-volt household flashlights. Now that's double BADD in my book. Totally love it.
Keep us posted, please.
MBZ123