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First, understand that I believe in serving and repairing as much as possible. I hate to replace a part, if it can be repaired and render a normal useful life. If the engine had not started and diagnosed as a bad engine, I would have opted for at least pulling it apart to find what failed- then replacing that.
Let's assume that your engine has either bad or seized rings causing a loss of compression, which of course can be diagnosed w/o pulling it apart. Also it should be noted that hanging valves will cause low compression, so check them for proper closing before dis-assembly.
I would remove the components necessary to pull the piston for an inspection. Typically, when the rings seize they do some damage to the cylinder (rust), which many times can be removed with a single pass of a cylinder hone w/o increasing the bore beyond specs.
If this comes true, simply cleaning the piston, replacing the rings and reinstalling & torquing restores the engine with almost zero cost.
As to buying a used engine, it depends on when it was last run, how long it has been stored and was it sealed during storage? I don't like buying someone else problems.
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