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I just posted about my head gasket replacement. I paid $1250, but I also got a second quote of $1900 (that included valve job), I went with the lower price (no valves). both were indy shops.
There are two things you can do to see if the gasket is bad: 1) borrow a boroscope, it can 'see' if you have coolant in the oil, 2) have the cooling system pressure tested (they blow air thru it, and if there are bubbles in the oil, then you got a bad head), it'll cost you about $100-$150.
Good luck, and post what you find out.
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'96 855 Wagon, 200k (and formerly 97 850, 120k)
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