Ok this is a situation I am unfortunately familiar with.

The first situation is rebuilding the current engine. It is going to cost alot by a shop to do it, but can be worth it if the warranty is right. This is good because of the parts used. If you rebuild it yourself it could save you alot, but take longer depending on your free time.

The second situation is buying a rebuilt engine from someone. I personally have bought a remanufactured engine from a local rebuilder here and regreted it. I spent 950 on it with a "warranty" and after a year the head gasket went out and the guy wouldnt warranty his work. (seller was enginehaus who is a member here) the problem with this is the quality of the work can be questionable. Wether it be not oem parts used that messes the rebuild up or the actual quality of the machine work done can be bad. The engine I had, had both things wrong with it. bad machine work and bad parts. I don't like buying rebuilds because they never run as long or as good as oem parts.

The third which is what I am most confident in. I like buying used engines from a toyota specific junk yard. These types of yards really take pride in their toyotas and usually know alot more than your average yard. They don't give a long term warranty that I know of but are ussually pretty reliable. the only thing you have to worry about is if the yard tests their engines before the pull them and before they sell them. Good yards will have videos of the engines running in the trucks before they pull them out of the weather. Then before you buy it they should to tests like oil pressure test, compression tests, and maybe a few other depending on the depth the go into. This should be one of the first questions you ask about.

When buying engines either from a yard or a rebuilder, there will always be suprises!! I can't stress that enough. Every engine I have bought I have found unpleasent suprises with them. Wether it be the crappy parts used in the rebuild or water in the spark plug holes from the yard not bringing the engine out of the weather. So ask questions, get agreements in writing. And shop around and research the reputation of the shop or yard your going to.

Good luck .