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Florida Girl,
Compare total costs of each of the repairs (engine replacement vs. head rebuild).
I wouldn't think that there would be too many issues with replacing the engine with a later year if you used only the long block. There aren't too many sensors on the motor itself, knock sensor, cam position sensor, etc. If the your indi used the intake and exhaust manifolds off of your old engine, problems should be minimal.
As for what to look for on the used engine, rear main seal. That could be replaced before installing the motor. Does it come with a warranty/trusted source. Can you hear it run? These are good motors, many out there with over 200k on them.
In any case, please post the decision and outcome. Good info for others.
Phantom
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