I don't think you'll know without having it hauled, throughly inspected and the oil analyzed. I would suspect that a 35 year old marine diesel with 10,000 hours on it was due for a complete overhaul, and depending on corrosion, cost of replacement parts and availability, might be past it. I saw a boat with an otherwise fine Thorneycroft diesel I rejected because the cost to repower was 50% of the asking price.
On the other hand, there are 40 year old Perkins 4-107s and 108s happily chugging away, not to mention Atomic 4s going back to the '50s. Parts and more importantly, a competent "user base", is available in order to make the best decisions.
A repower can give you a warranty, likely greatly improved emissions and fuel efficiency, and access to current parts. Depending on your usage, this might be the way to go. If you want a slow-turning workhorse, however, you could just as easily drop in a reconditioned Perkins for a fraction of a new repower...if it doesn't mean rebuilding engine stringers and mounts!
I will say that the old engines were designed to be rebuilt. Whether that is cost-effective is another story.