Our Volvo-Penta MD11C two cylinder Saildrive had no compression or power.
30 year-old Volvo parts are hard to come by and we waited nearly 9 months for components to replace the cylinder liners and rings. After all this time we bit the bullet and purchased a modern 4 cylinder saildrive for $13k A hard decision but full time ocean cruising demands a reliable auxillary in the boat.
We'll have that soon, launch day is fast approaching and our Niagara 35Mk1 will have wings with that 39 hp !!!
Ken and I know each other quite well, and have broadly similar cruising plans, so I feel happy to agree that in his situation, replacement made more sense.
In my case, rebuilding makes more sense. As has been stated elsewhere, total hours and the cooling state make a big difference. So does availability of parts.
My engine is 20 years old, but has only 1,300 hours on it. A rebuild will very likely only reveal ring wear, and some other minor fixes. On the other hand, the pattern of 20 winterizations and low, cold hours could show a problem I don't want to face in Fiji three years from now. Also, my engine is not only fresh-water cooled (anti-corrosion anti-freeze, in fact), but the raw water is fresh water. So the pump, heat exchanger and starter will be replaced, but as they all work very well, they will be the spares for the trip.
My engine takes Mazda spares and gaskets as it's essentially a Mazda pickup block...there's about 100,000 of them still in Australia alone, working and being serviced. A full set of rebuild parts would run me about $7,000, with maybe $2,500 for the labour. A new engine would cost $15,000, plus extensive welding work, tank migration, shaft tube alteration, and so on added to that cost. Lastly, my engine is ridiculously easy to access: drop a hook directly down after lifting off the pilot house roof.
At 2,700 hours on a 29 year old engine, you are facing a situation closer to mine than to Ken's in that I assume it's working well, but it has been used sparingly. If that's the pattern, then the benefits of a new, lighter engine (that runs hotter and needs lots of air to get those fuel savings) might never match another 29 years of the same old engine, but rebuilt.
Just my thoughts...I've been mulling this over for about 18 months now, and my solution is mine alone.