Having a look at the engine in depth before starting considering alternative engines looks to me a sensible route..
Open the engine, if need be, and have a look.
I replaced some pushrods over the years and engine damage was minimal so let's be positive.
Apart from the handbrake, I have the 200 Tdi in the Series almost finished - need to finish some minor body mods - and the big question for me will be if the present standard diffs / gearbox ratio's will work for me. I am not too worried about the gearbox as it is a fully rebuild one and I used the well know Mazda with different gearboxes, abused the hell out of them and never broke them..
However, having in the workshop a rebuild 3.54 diff with a airlocker is tempting...
But we'll see - once the handbrake is sorted and the last few other bits are done, I need to get an CT (French MOT) and drive the thing.