Help - my '91 Tercel is dying

[iluvmy2yota]

Hi, I've registered on a couple of different sites, but so far nobody has been able to come up with any constuctive advice. I'm hoping this may be the place.

I have a 2 door '91 standard transmission tercel, who has served me very well. I used to get about 30 mpg(highway)/20 mpg(city but lately I've noticed a severe drop in these numbers (by a factor 2 - ie. half of what they were). It is also starting to use a lot more oil than it used to. I understand it's an old car, but we're talking about 5 quarts in the last month.
I've also noticed that the temperature gauge is not moving at all, and the heater doesn't really blow hot air even when the car supposedly is warm. I guess this means that the thermostat is gone, but could it mean something else too (higher gas and oil consumption perhaps)? Last summer I had an incident where the car almost overheated, and in fact stopped on its own while driving. After having checked the coolant, I found the reservoir was empty. I figured that was the problem, refilled it and didn't think any further about this, as it again was driving fine, although thinking back now it was a little rough at times.
As you can probably tell, I'm no ace when it comes to cars and their maintenance, and I'm afraid it has come back to bite me in the a....
Besides the heavy gas and oil consumption, I've also noticed white smoke coming out of the exhaust, which from what I've read so far on this board (and others) could mean that coolant is getting leaked into the motor and combusting it (which would explain its consumption). On top of that, I've also noticed in the last month or so that it loses it's power even with the slightest incline (going up a hill). On flat roads there's no apparent change.
I took it to a local shop and they claim that cylinder #4 is blown, and I will have have to exchange the motor, which could set me back $1500+. Now, I'm a student with no money, yeah I know what's new, but I'm really dependent on having a vehicle so what do you guys recommend? Is it possible to just replace the blown (4th) cylinder, or is it a lost cause already? Could it be that the faulty thermostat is causing these problems? Again, I don't know much about cars, but if the thermostat isn't working wouldn't it mean that the car doesn't "know" when it's warm or when it's overheating? I also read somewhere here on these boards that a faulty thermostat by cause the coolant to overflow. Any truth to this?
Any advice from you would be much appreciated, I could really use some good news right about now. Thanks in advance for your help.

A desperate Tercel Owner

[hueroloco]

i have the exact same car!

It sounds like the head gasket leaks (or the cylinder head is cracked, both would produce similar symptoms). Strange that the temp gauge isn't moving, seems like it would overheat due to the leak. The heater not blowing hot air is because when the coolant escapes from the system it develops an air pocket and air pockets love to hide in the heater core. Air is of course not as dense as water so it can't give off it's heat like a heater core full of water (or coolant).

A blown head gasket will most definitely cause rough running, loss of power and gas mileage and if the coolant is escaping into the combustion chamber, it will produce plumes of white smoke (significantly bigger as it gets worse).

Your #4 cylinder being blown it probably due to the valves. My Tercel has a bad valve in the #4 cylinder. It still runs pretty decent, but technically speaking, #4 cylinder is blown.

#4 cylinder being blown could be due to having bad piston rings also. In that case your best bet would be to replace the engine.

There is the possibility that if you replaced the cylinder head gasket and while your cylinder head was off, have the valves and seals checked/replaced that all your problems would be solved. But if your oil consumption problem or your loss of compression in the #4 cylinder were caused by bad piston rings, then you need an engine basically. You could replace them, but most of the time you can just get one of those japanese used engines for a better price than rebuilding.