Yeah, having the gaskets done is out. I got a few quotes for rebuilding the engine, anywhere from 2000 to 2600, all with at least a 1 year/12k mile warranty. Two quotes were like 4200 but they offered a 100,000 mile warranty. I'm leaning towards rebuild since the car is otherwise in good condition.
Just out of curiosity I asked a shop about swapping the engine for the 3.8 L67. Told me they can do it, but a lot of other things have to be replaced (which I knew), and that getting it smogged would be a pain in the ass (I live in CA). Would be like 4500. Its a fun thing to dream about, but just not realistic.