It's uncommon to have bad rings and head damage. Even more suspicious if the head wasn't removed to inspect for damage. Borescopes can see some damage, but it's not nearly as good as a visual inspection with the head off. It might be worth getting a second opinion if you have the time and money to spare for another mechanic to look at it. If you are mechanically inclined you can do a compression and leak down test yourself.
If I had to choose between the used, jdm, and reman I would choose the reman. If you are on a budget then I would recommend the used engine. Keep in mind with a jdm engine a lot of components will need to be changed over from your old engine. Are you planning on doing the repairs yourself?
EDIT: If you plan on doing it yourself there are youtube videos and writeups on replacing the engine. Mtbtim will probably post here shortly promoting his youtube videos on the procedure.
With a leak down test, a mechanic can narrow down the source of the leak from the cylinder by listening where the air is escaping. You could be losing compression through a bad intake or exhaust valve or valve seat. You could be losing compression past bad piston rings. You could be losing compression via a bad head gasket or cracked head.
But, [MENTION=319302]Bad Luck[/MENTION] is still giving good advice. I'd either perform my own leak down test or get a second opinion on where you're losing your compression.
It's pretty conclusive in some instances to know where you're losing compression. If you hear air from the exhaust, you're losing compression past a burnt exhaust valve or valve seat. If you hear air in the area of the intake (ex: throttle body), you're losing compression past a burnt intake valve or valve seat. If you see bubbles coming up into the top of your radiator, you either have a bad head gasket or a cracked head.
Where it gets tricky is when you hear the air escaping into the crank case. It could be getting past bad piston rings but it also could be a bad head gasket. When a head gasket fails, it's not only between the cylinder and a coolant jacket. It could have failed between the cylinder and an oil gallery. So, I'm assuming your mechanic heard air escaping into the crank case and made the assumption it's bad piston rings. My bet is your piston rings are fine and it's a head gasket issue.
No, I won't be "Promoting" my 5VZ-FE Engine Replacement series here because it sounds like the OP isn't going to swap his own engine. But, I will "Promote" my Engine Cylinder Leak Down Test video so the OP better understands the process and then can go back to the mechanic to listen to the guy's explanation of how he determined it was bad piston rings. You know, one could say I'm "Sharing" my videos to "Help". So yes, by "Sharing" my videos to "Help" people, I guess I'm promoting people to watch them.
For the decision on which way to go if you're going to replace the engine, it depends on how much money you want to spend and how long you plan on keeping the vehicle. I would never put a JDM or used engine in one of my rigs because you just don't know what you're getting. They can say the engine only has 60k on it but how do you know they're telling the truth? The answer is you don't know and it's a huge crap shoot for you especially if you're going to be paying for the swap. That's a huge labor expense to find out you got a piece of shit engine.
My recommendation is to buy a remanned engine from a reputable shop and there's none better in my opinion than Yota1 Performance in Riverbank, California. I know this shop intimately and they do great work. Because they build great engines and they are in demand, the lead time is around 5-6 months now.
Yota1 Performance Engine & Machine - Your Toyota needs all in one place!
Good luck OP.
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