I assume the mechanic did a "leak down" test to assure the leakage was past the rings.

The engine can be rebuilt. If like my OM617 (300D, 5 cyl) engines, the cylinder liners are replaceable. Non-turbo pistons are comparatively cheap. But, non-turbo motors aren't very valuable, so may not make sense, especially since your storage space is limited. At least try to save the crankshaft since doesn't take much space. Next would be the cylinder head since those are rarer than blocks, given that heads suffer cracks around the valve seats.

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1984 & 1985 CA 300D's
1964 & 65 Mopar's - Valiant, Dart, Newport
1996 & 2002 Chrysler minivans