A couple years ago I replaced a head on a 1980. The head is slightly different than yours since it had the pencil glow plugs, but at that time a new bare head was $800. I ended up putting on a rebuilt head with new valves, milled flat, checked for cracks, no welds, and guaranteed for one year for around $800. Cracks can be welded, but personally I would get a head that has not been welded, especially on a diesel.

Another reason for oil in the water is that the cylinder block may not be flat and may need to be milled. This would require disassembly of the engine, and you would not know until you took the head off and checked with a very straight edge.

Used heads should be readily available for the 300D.