Why not first do some proper diagnosis work and see exactly what is wrong with your engine, and get an estimate to fix it. It sounds like you don't really know what you are dealing with here. You may not need a new engine.
Only you can decide if you want to keep the trac for sentimental reasons.
You will have to consider the real and tangible costs to move ahead for the alternatives you have.
For me, the "hassle factor" is very expensive. I realize that anything can be rebuilt and repaired to stay on the road forever, but after 3-4 months of huge repairs or being stranded, I am quickly done with it. I sell it for what I can get and move on. Others don't think like me. It also depends on how severe your need for your Trac is. If you have other transporation options, you might be willing to mess with it.
The biggest mistake is considering "sunk costs" in your decisions. You might think that you have to keep it for a few years to "get your money out of the past repairs", but that is irrational thinking. Always ignore past sunk costs. Only consider where you are at present, and the costs to move forward. Trying to justify sunk costs will just bury you quickly under poor decisions.
As for KBB, that is only a guide. The true value of any vehicle is how much you can sell it for. You may get KBB value, or you may get half of KBB value. How much a vehicle is worth only plays into a proper decision as to its "residual/scrap value" if you want to sell it to move on. The value to you may be a whole lot different than what you can sell your Trac for. The question to ask yourself is "what could I sell it for, and what could I turn arouind and buy with the cash from the sale?" Only then can you decide what your value of your Trac is. If you can sell it and only buy a rusted out Yugo with the proceeds, it doesn't matter what KBB says it is worth. Th trac is obviously worth more to you than a rusted out Yugo. (or maybe not- maybe you would be happier with a rusted out Yugo), but that is your decision, not KBB's.
It sounds like you want to keep your trac, and that is OK. I would at least diagnose what you have right now, and get a cost to fix it. Only then can you decide on the best course of action. A junkyard engine may be a great deal, but you don't know its history or what you are getting. Knowing what you have can be worth quite a bit if you get stung on something else. It may not take much to fix your current issues. Find out before freaking out!
Hope this helps. Good luck.
