Jviss, Yes I do believe I have enough ablility to tear it down and take a look at the pistons and cylinders. And no the 2nd mechanic did not let me know what he thought would be the secondary issues that would cause me issues? I guess these guys just take a look at a leaking heat exchanger and rust on the exterior of the engine and then decide to give up and forget it? They all are way to busy for my liking..(it must be nice!) Anyway, I will keep you posted if I decide to junk it and replace with something else. The same guy wanted 4 grand just in labor as an estimate to replace the motor with something else. Thanks, DC
DC, at this point I would really like to see you pull the head and take a look at the valves, and the cylinder walls.
Don't worry about the heat exchanger. These don't last forever, and are a $400 or so item. If you buy a new one, well, you'll have a new heat exchanger, and not have to worry about it.
A cylinder head job will be way, way cheaper than a re-power. I would contact a local Kubota tractor dealer or parts outlet and ask about a local engine machine shop that will do a cylinder head job, which will usually be to disassemble, check head surface for flatness and surface grind if necessary; check valves and valve springs, replace as needed; grind valves seats; lap valves to seats; reassemble. Probably won't be much more that a couple of hundred (guess).
Then a new head gasket, new valve cover gasket, adjust valves, adjust compression release, and fire it up!
If the cylinder walls are just glazed, you can live with that, it just might smoke some. If you have scored walls, broken rings, damaged pistons, etc., you'll have to do the bottom. If you are very clever and very lucky, you can do this in place: would need to be able to get the oil pan off and out of the way. You can then cut the ridge, disconnect the big end from the crank, push the pistons out the top, hone the cylinders in place, install new rings, re-install pistons, etc. The you have to break it in properly, but you would have a pretty good engine after. Still much, much cheaper than a re-power.