As far as a rebuild it depends what you want to do. For 1600 you could pick up another corolla and run it into the ground. If you just want to make the thing roll you could grab a used motor for like 3-400 bucks and swap it in yourself if you have the tools. Ebay engines are always questionable and unless its a crate motor from a really high end reputable shop, like a stickley built motor I never trust someone elses work. And even then I would rather know then assume because I trust someone. I don't know whats wrong but the tools and gaskets might get you up there in cost. Slapping a new headgasket on a motor is no big deal and doesn't cost much to tackle. One thing with an ebay motor is I wouldn't trust the gaskets and shit they used. Probably bought from ebay. I have certain brands and stuff I trust and like that I only use. But thats just from personal experiance.
New rings, headgasket, milling the head, valve seats, honing the block, maybe some bearings, a nice torque wrench, fresh hardware, more gaskets, should be around 1600. Maybe not with the torque wrench I think the snap on shit I have is like 600 bucks.
Anyway if your just going to throw the same accessories on and not overhaul like everything, which I don't understand why you would anyway. I wouldn't spend the money on a $1600 motor but thats just me. I'd rather search for a running used motor for like 3-500 bucks, swap it in and maybe rebuild the other one over time. Swap the one you rebuild in and test it out. If its OK after a couple months sell the used one you bought.
