My mechanic, who has serviced my cars for 20 yrs, says that it is stupid not to do guides and a valve job on this motor if you have to do the head gasket. You will then have a motor which is almost like new, since the bottom end is almost unbreakable.
It all depends on whether you wil keep the car or not. $1k is not unreasonable for a comprehensive job

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John
92 500e, 85k, silver/gray,all stock.
96 Club Wagon,Hypertech chipped( College Hauler)
97 320 SL 50k
1980 BMW e21 323 Baur conv.
1990 300GE 99k