It entirely depends on the existing condition of your D2 and the depth of your pockets. Personally, I'm a diesel head, turbo diesels. I would go with another 'good' engine and then check it and rebuild it or a Turner reman if the budget is good to go. I have an LR4 (D4) stock for comfort, great truck for everything but it's huge by comparison. Me, I love smelly TD's and have a D2 TD5 but that's not an option in the US. So, you have a quandary, old Rover V8 engine, Chevvy V8 or diesel TDi. As for Jeeps, nuff said already, this side of the pond we call 'em 'tarts cars' or 'hairdressers cars', never seen a dirty one yet. (for laning I have a Pajero 2.8TD SWB which is magic apart from I'm rebuilding the engine that blew up, HG plus cracks)

 

My first step would be to tear into your engine to find the problem and if it’s fixable. Engine needs to come out anyway. Then determine your budget and decide accordingly.

 

Turner engine.

Sorry folks, but when you get a 14+ year old vehicle, you're buying a project car and not a reliable daily driver. To get that car into a good working order, you're signing up for an almost off-frame restoration if the body and the frame are indeed in good condition. I'd get a Turner engine + re-paint, restore. That's the road to getting one of the last true SUVs.

Granted, you can go with a Defender/110 route, but you'll pay a decent coin plus those vehicle and they won't be as enjoyable on highways.

 

All my D2’s 99 & up with mileage from 107k all the way up to 232k are 100% reliable and operate like new or I wouldn’t bother owning them. I don’t go out & buy the first LR I see, I hunt down a good one & know exactly what to look for. No reason to buy a beater unless that is what you want. Good & very reliable D2’s do exist!

If one of my D2’s was to have an engine die (not a drop of rust on any of them), I’d seriously look into the Trailhead 4x4 Chevy 4.8L conversion which keeps all the OEM sensors and engine management along with the transmission.

The LR V8 can last a good while if kept up like an SR71 Blackbird or B52. Skip maintenance & abuse anything & it will eventually fail no matter what it is.