Engine/transmission question for 85 4X4 wagon

Hello fellow wagon enthusiasts! My daily driver - 1985 Civic 4X4 wagon - is beginning to blow smoke after starting. I also hear a noise (clicking sound) that disappears when I push in the clutch pedal. The car just turned 215K miles and is otherwise running well. I still get ~30-33 mpg consistently. I took the car to my mechanic who told me I'm going to be looking at an engine rebuild and most likely a new transmission. He also recommends replacing the clutch while we're at it. I love this car and don't want to put it out to pasture. I was given a preliminary ballpark figure of $4K to do all the work. This was a "worst case scenario" according to my mechanic, but that's the best he can do not knowing what he's getting into. He has extensive experience working on these little cars, but has admittedly never worked on a wagon that is 4WD. My questions are:
1. Does this seem like a reasonable quote?
2. Would you recommend scrapping the engine/transmission and finding remanufactured units, providing they are available?
3. Any recommendations on where I might find used/guaranteed/remanufactured engines and/or transmissions?
I have considered buying a new car, but I just can't wrap my brain around $25,000 for an AWD car that gets the same mpg as my little Honda. I NEED AWD, period. We just have way too much snow where I live (Ellensburg, WA) and I commute over a pass every day.
Any help would be greatly appreciated!
1. Does this seem like a reasonable quote?
2. Would you recommend scrapping the engine/transmission and finding remanufactured units, providing they are available?
3. Any recommendations on where I might find used/guaranteed/remanufactured engines and/or transmissions?
I have considered buying a new car, but I just can't wrap my brain around $25,000 for an AWD car that gets the same mpg as my little Honda. I NEED AWD, period. We just have way too much snow where I live (Ellensburg, WA) and I commute over a pass every day.
Any help would be greatly appreciated!
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