96 Sunfire - Engine Replacement?

I have 96 Sunfire 2.2L with 138K on it. Since past couple of weeks I've been experiencing following problems:

1. Blowing thick black smoke
2. Stalls intermittently at traffic lights
3. Misfires

I had it checked completely and the mechanic suggested an engine replacement! He gave me a printout of results and said there are two cylinders misfiring and there is a little crack in head gasket. Now I can't even drive the car as the pickup is terrible. Should I get the engine replaced? I can't even sell it in this condition (it won't even pass the emission test). Mechanic said, he would find me an engine with around 77000 clicks for $1100 - $1300. Is it worth? This is my first post, I would really appreciate any inputs.

Thanks

got my engine for $300 shipped, shop around and you can find a good one for a decent price. I got mine from an insurance company that takes apart wrecked cars. I think it was called LKQ