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your best route is to just stip it down, clean everything, get new gaskets and seals. you can do the whole deal for around 300-500. the only thing you need someone else to do is resurface the head. everything else can be done in a garage. this is all dependant upon how bad that rod knock is, if the bearing is spun bad, then the crank would need to be reground, but even that shouldnt run more than 200, and thats worst case.
ive got no idea what kind of short block this guy is building for 2500-3500, for that price you could get just about the best of the best for everything in there.
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