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Sure it is a blown engine or blown transaxle? Driving around in lower gear than usually (high RPMs) generally be harder on the transaxle than the engine, especially with an automatic. With a standard - possible that you could harm the engine.
Short answer - yes, the newer 9th gen Corolla 1ZZ-FE engines will "fit" in the 8th gen Corollas. Being a direct swap is a different matter. This has been discussed at length on the forum, just do a quick search.
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2002 Corolla S, 1.8L 1ZZ-FE VVT-i
2003 Matrix XRS, 1.8L 2ZZ-GE, VVTL-i (RIP)
2009 Matrix XRS, 2.4L 2AZ-FE VVT-i
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