This may be a case of find another mechanic. He wants to do an engine R&R without proper diagnosis. Also, matter of worth is for customer to decide - not the mechanic. The mechanic's job is to diagnose, lay out alternatives with price, implement per the customer's decision and warranty his work. Those that can't diagnose frequently can't implement correctly and stated warranty becomes meaningless.

Yes, begin with leakdown. Gives more information than compression.

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85SD 240K & stopped counting painted, putting bac together. 84SD 180,000. sold to a neighbor and member here but I forget his handle. The 84 is much improved from when I had it. 85TD beginning to repair to DD status. Lots of stuff to do.