You would be smart to remove the head on the side with the low compression before deciding to rebuild the engine. A blown head gasket is the most likely problem. At that point, and not a moment sooner, you will know whether you need head gaskets or an engine

 

The LS2 conversion kit underdevelopment form ACE would seem to be a option priced near what the 4.0/4.6 replacement will cost you ($3500).

$1600 for the conversion kit
$1000 for a used LS 2 + accessories
Leaving you $900 or ~14 hour labor at $65 per hour to get the upgrade done.

 

Which brings me to my next question...
What tends to work out better between rebuilding and replacing? (My engine is 150,000 miles. My mechanic wants to involve his machine shop in doing a rebuild -vs- A LR shop wants to do a replacement with an 80,000 miles 6.4 engine)
My objective is to have an engine that's as nice as possible to match the nice body of my truck.

 

Figure out your issue first, then ask that question.

 

I understand, but the question is to help me choose the best way of resolving the issue and what is the best long term decision for the truck.

 

Nice as possible sounds expensive. If nice as possible is the objective, I would go with a professionally built engine out of the UK where they do these much more frequently and with the utmost care, I would not go with a used stock engine.

I personally don't think a professionally built engine is necessary for typical Disco use, but people are allowed to spend their money however they see fit. If it was mine I would start with the oldest possible Bosch block I could find, probably a red P38 block, and build that. LR let their tooling deteriorate so the earliest blocks are the best. I would put non SAI heads on it with new rod bolts, forged pistons, and I would probably put a TVR 5.0 liter crank in it (340 hp) with new bearings. New rocker shafts, new timing chain, new cam, new lifters.

Good luck

 

Thank you! Feels like I'm going to need it...

My mechanic was basically only talking about rebuilding the current engine; nothing outlandish. If I could just have him get it back to running as good as it did before this problem, that would be nice enough for me. I do want to keep my Rover, but I'm definitely not looking to spend a fortune on this.

 

IF your problem is more than just a HG, I would do a very basic rebuild. If it was my truck and I was going to use it for a DD I would do what I recommended early, just pop the bad piston out and put new rings on it. These engines are basically good for 250k with nothing major. My current DD has 238 on it and just did a hg refresh on it, runs like a top with good power and no oil consumption. If and when I am coming up on 350k I will probably get a low mile 4.0 and swap it in. Lots of those with rusty frames in the NE.

 

Already spoke to 2 shops that refuse to take on the job unless it's a complete replacement. I guess Land Rovers are intimidating to the non-initiated. Another one quoted me $6000, not counting possible unforeseen/extras. That's a bit ridiculous. That's up there in dealer quotes range!
I'm not mechanically inclined, so I'll just keep looking for a place to get it worked on at a reasonable price.

 

Yeah, I went through three or four shops before I found a real indy LR guy who would just do head gaskets, they all wanted to do the full replacement.. I wouldn't trust any of those guys with my truck even for a full replace.