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If the tranny is fine now, no need that I see to replace. Could be worn valve guides also, may just need to have head redone or replaced. Usually toyota lower end engine parts last a very very long time, as long as oil has been changed on a regular basis. I would try to find one used with lower miles if possible, swap it out. New engine or rebuild by a reputable shop will probably cost more than the car is worth. Toyota engines are touchy to rebuild, you have to have someone who knows toyta engines and how they are custom fit with parts from the factory to get a good overhaul. I can explain further if you need.....
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