I would guess to say at least what he's asking for it, and then you still have an unknown engine and don't know why it failed in the first place. If you don't fix why it initially failed, you will be rebuilding it again. Chances are it will need the injectors cleaned and flow tested(this runs a pretty hefty amount by itself to do the air inejctors which are critical on these engines), welding the block up if it is salvadgeable, at least a rod and piston, but most likely a rod and a complete rebuild kit. I could easily see $2500 in just parts to go through it, and you still have the unknown of why it failed and is it going to let loose again in 20 hours. I couldn't see paying more than $1500 for it myself. Chances are theres a reason he is willing to trade it for a 2.5L carbed engine as he is probably tired of dealing with it.